Diesel Props S.r.l. v. Greystone Business Credit II LLC, No. 09-3899 (2d Cir. 2011)
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09-3899, 09-3900 Diesel Props S.r.l. v. Greystone Business Credit II LLC 09 09-3899, 09-3900 Diesel Props S.r.l. v. Greystone Business Credit II LLC 09-3899, 09 3900 Diesel Props S.r.l. v. Greystone Business Credit II LLC 1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 August Term, 2009 4 5 (Argued: April 14, 2010 Decided: January 6, 2011) Docket Nos. 09-3899-cv, -3900-cv 6 7 8 DIESEL PROPS S.R.L., DIESEL KID S.R.L., 9 10 Plaintiffs-CounterclaimDefendants-Appellants, 11 - v. - 12 13 GREYS TONE BUSINESS MARKETING INC., 14 15 16 17 CREDIT II LLC, GLOBAL BRAND Defendants-CounterclaimantsAppellees. Before: KEARSE, SACK, and LIVINGSTON, Circuit Judges. 18 Appeal from a judgment of the United States District Court 19 for the Southern District of New York, Harold Baer, Jr., Judge, 20 entered after a bench trial, dismissing plaintiffs· claims against 21 defendants 22 defendant 23 counterclaim for unjust enrichment. 24 25 26 27 and ordering Greystone plaintiff Business Credit Diesel II Props LLC S.r.l. to pay $677,381.93 on its See 2009 WL 2514033. Affirmed in part, reversed in part. IRA S. SACKS, New York, New York (Jennifer Daddio, Law Offices of Ira S. Sacks, New York, New York, Mark S. Lafayette, Melanie 1 2 3 4 Sacks, Olshan Grundman Frome Rosenzweig & Wolosky, New York, New York, on the brief), for Plaintiffs-Counterclaim-DefendantsAppellants. 5 6 7 8 OLIVER J. ARMAS, New York, New York (Chadbourne & Parke, New York, New York, on the brief) , for Defendant-Counterclaimant-Appellee Greystone Business Credit II LLC. 9 10 11 12 13 MICHAEL J. TIFFANY, New York, New York (Leader & Berkon, New York, New York), submitted a letter in support of affirmance on behalf of Defendant-Counterclaimant-Appellee Global Brand Marketing Inc. 14 KEARSE, Circuit Judge: Plaintiffs Diesel Props S. r .1. 15 ("Kid") S.r.l. 17 entered 18 District of New York following a bench trial before Harold Baer, 19 Jr. , 20 Greystone Business Credit II LLC 21 Marketing Inc. 22 $677,381.93 23 for unj ust 24 that the district court abused its discretion in rejecting, after 25 trial, Diesel's claims against Greystone for breach of contract, 26 unjust enrichment, and account stated, and in holding Props liable 27 to Greystone for unjust enrichment. 28 we reverse the judgment against Props for unjust enrichment, and 29 we affirm the judgment in all other respects. the Judge, United (a) "Diesel") States dismissing District their ("GBMI"), and (b) in damages, enrichment. appeal and Diesel Kid 16 in (collectively (If Props If) Court claims from a for the against ("Greystone") judgment Southern defendants and Global Brand ordering Props to pay Greystone including interest On appeal, - 2 - I Diesel on its counterclaim contends principally For the reasons that follow, 1 I. 2 Most of the BACKGROUND background facts of this controversy 3 undisputed and were stipulated by the parties prior to trial. 4 A. are The Relationships Among the Parties 5 Props and Diesel Kid are Italian (IiSpA II ), 6 nonparty S.p.A. 7 Diesel-brand merchandise. 8 produce adult 9 Diesel companies, which owns the of trademarks on Props and Kid are licensed by SpA to shoes and children's shoes, trademarks. subsidiaries In 2005, Props respectively, and Kid bearing entered into 10 distribution agreements with GBMI, 11 IIDistribution Agreements ll ) , pursuant to which GBMI would purchase 12 Diesel-brand shoes designed and manufactured by Diesel and sell 13 them to retailers in the United States. 14 GBMI was experiencing severe financial difficulties and owed SpA 15 and Kid more than $7 million in back royalties and advertising 16 commitments. 17 more than $11.5 million. 18 a California corporation (the In the summer of 2006, By December 31, 2006, those amounts had increased to Greystone is a Delaware company that makes loans to 19 financially distressed companies and takes security interests in 20 their 21 entered into agreements pursuant 22 funds available to GBMI and would make payments from those funds 23 directly to Diesel. 24 GBMI, assets. In December 2006, Greystone, GBMI, and Diesel to which Greystone would make On December 2, SpA and Kid sent a letter to with a copy to Greystone, stating that Props and Kid were - 3 - 1 each willing to sign a three-way agreement with Greystone and GBMI 2 with respect to such financing. 3 executed a loan and security agreement 4 Greystone established a $25 million revolving credit account for 5 GBMI 6 substantially 7 including 8 [GBMI 's] 9 identical in substance, were executed- one by GBMI, Greystone, and (the "revolver") all "all in of of the exchange GBMI I On ("LSA"), pursuant to which for present S [GBMI' s1 business." On December 4, Greystone and GBMI a security and other by GBMI, same day, two letter agreements" 12 Distribution Agreements. 13 requiring, 14 Distribution 15 purchase order for Diesel products from a 16 Purchase 17 orders 18 such products to GBMI, 19 for 20 Diesel and Greystone with copies of invoices that GBMI sent to its 21 customers 22 delivery of such Customer Invoices to Greystone would constitute 23 an 24 from GBMI I s 25 corresponding 26 orders not placed according to the terms of the TPAs--including inter alia, Agreements Order") to Diesel those to (the agreements, 11 reference Kid to Props, "TPAs")--with and relating 10 or Greystone, in after-acquired assets, books and records the interest the "tripartite LSA and the The TPAs contained payment provisions that GBMI unless not it place had an order under received retailer a bona the fide (a "Customer and that GBMI provide copies of such customer and Greystone i products that Invoices") i ("Customer Invoices"). and that GBMI supply In those circumstances, GBMI's that Greystone automatically pay Diesel, revolving credit account, Diesel before delivering send Greystone copies of Diesel invoices ("Diesel irrevocable request Diesel, Invoices. With - 4 - the amounts respect shown on the to GBMI debts on 1 debts to its suppliers 2 authorized to make payments from GBMI's credit account except as 3 expressly instructed by GBMI. 4 account 5 provided that Diesel had the right, 6 shoes to GBMI, 7 as to, 8 with respect to any requirements imposed by the LSA (the "notice 9 provisions") . could be used other than Diesel--Greystone not Diesel was aware that the credit to pay other GBMI creditors. The TPAs at any time before shipping to request and receive information from Greystone inter alia, whether GBMI was in noncompliance or default Despite the December 2006 arrangements, 10 was GBMI's financial 11 difficulties continued. At various times- -beginning in December 12 2006 and January 2007--GBMI was in default of revenue covenants 13 and other terms of the LSA. 14 months, 15 Diesel was never paid. 16 Greystone that Greystone was in default of the TPAs for, 17 alia, failing to make payments, and notified GBMI that GBMI was in 18 default of the Distribution Agreements; Diesel informed each that 19 unless 20 consider its agreements terminated 21 letters"). 22 had cured its defaults, Diesel notified them that their respective 23 contracts 24 thereafter commenced the present action. In addition, during the next eight Diesel shipped to GBMI several lots of shoes for which its defaults On September 4, were cured within 2007, 30 Diesel days, notified Diesel inter would (the nconditional termination On October 17, 2007, after neither Greystone nor GBMI were terminated as of October 4. Diesel shortly 25 At the time of termination, GBMI had received orders from 26 retailers for 520,202 pairs of Diesel shoes for the 2008 spring- 5 - 1 summer 2 associated with collecting those orders. After terminating the 3 Distribution Agreements with GBMI, designated Diesel USA 4 (IID-USAII), 5 distributor. 6 had no experience in selling shoes to retailers, and 7 information about other retailers' orders for the SS08 season. 8 November, 9 complete 10 personnel 11 "dowry" and 12 year." D-USA had net sales for the SS08 season of more than $14 13 million, 14 who included those identified from the GBMI Order Book. 15 B. 16 season ("SS08 11 ) and had incurred Diesel significant expenses a wholly owned subsidiary of SpA, as its United States D- USA had operated Diesel-brand retail stores but D- USA hired a list of GBMI' s referred wrote to n former GBMI employee, open orders (the the [i] t Order looks Book like as had little In who gave D- USA a "Order Book"). the GBMI Christmas came Props employee's early this selling 369,266 pairs of Diesel-brand shoes to retailers The District Court's Rulings After Trial In the present action, Diesel asserted numerous ims, 17 several of which were dismissed prior to trial. 18 pertinent to this appeal, Diesel's third amended complaint 19 principally that 20 many defaults by GBMI under the LSA and had thereby breached the 21 TPA notice provisions; that the failures of GBMI and Greystone to 22 pay Diesel 23 Agreements 24 enti tIed to recover from each defendant for breach of contract, 25 unjust enrichment, or account stated. Greystone shoes and the had failed shipped to GBMI 6 - leged to give Diesel notice of breached the Distribution TPA payment provisions i - To the extent and that Diesel was Diesel sought approximately 1 $20 million in damages, 2 with 3 Greystone 4 seeking more than $30 million for unjust enrichment. Props's acquisition claimed a The district 5 plus interest. of security the Greystone, GBMI interest, Order in connection Book, asserted a in which counterclaim court held a three-day bench trial on the 6 above claims. In a posttrial Opinion and Order reported at 2009 7 WL 2514033, No. 07 Civ. 9580 8 annotated with citations to pertinent documents and to testimony 9 and other sworn statements by officials of Greystone, GBMI, SpA, (S.D.N.Y. Aug. 18, 2009) ("Diesel"), 10 Kid, and Props, the district court ruled against Diesel on all of 11 its claims 12 enrichment 13 Diesel's claims against GBMI on the ground that GBMI's obligations 14 to 15 Agreements, and those agreements contained forum-selection clauses 16 requiring all claims thereunder to be litigated in Milan, 17 See Diesel, 2009 WL 2514033, at *6, *11. make and ruled counterclaim payments to in favor against Diesel of Greystone Props. arose on The only under its court the unjust dismissed Distribution Italy. As to Diesel's claim against Greystone for breach of the 18 19 payment provisions of the TPAs, 20 was not entitled to recover, principally because it had not shown 21 that 22 payments had been performed. 23 the LSA, 24 one another," and that 25 the performance and fulfillment of conditions of the other." 26 at *2. a condition precedent to the court concluded that Diesel Greystone's obligation to make The court found that the TPAs and executed "on the same day, II "made express reference to "the terms of each w [ere] - 7 - conditioned on Id. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 [T] he LSA authorized Greystone to wire GBMI I S funds directly to Diesel II pursuant to the terms of the [TPAs] . II Likewise, Greystone I s payment obligations under the TPA w[ere] expressly II [s]ubject to the terms and conditions of the [LSA]." Thus, the standing instructions from GBMI to Greystone to advance revolver proceeds directly to Diesel applied only if the TPA applied to the particular orders for which payment was requested and all conditions under the TPA were met. . . . That is, if the terms of the TPA did not apply to a particular order for which payment was requested (i.e., the order was "outside" the structure set forth in the TPA)! Greystone had no authority under the LSA to wire GBMI's revolver proceeds directly to Diesel; rather, GBMI, as the borrower under the LSA, would be required to send Greystone a separate instruction to disburse loan proceeds to Diesel as a third-party. . The TPA contained three primary independent provisions. First, GBMI was required to obtain a purchase order from a bona fide customer ("Customer Purchase Order") before placing an order for shoes with Diesel. . A copy of the Customer Purchase Order was to be delivered to both Diesel and Greystone. Second, the TPA provided that at any time before shipping the shoes, Diesel had the right to request written notice from Greystone as to whether at the time of such request there were (a) sufficient funds to permit payment in the amount requested in the Diesel Invoice, (b) if not, GBMI would be prevented from requesting a loan under the LSA, or (c) if GBMI was not in compliance with any of the covenants and/or warranties under the LSA, or is in default under the LSA, irrespective of whether that non-compliance or default has been waived by Greystone [] (the "Notice Provision"). Third, pursuant to the TPA, GBMI was required to deliver to Diesel and Greystone a copy of any invoices to customers ("Customer Invoice"), which were deemed an irrevocable request for disbursement of a revolving loan in the amount of the corresponding Diesel Invoice [] (the "Payment Provision"). In accordance with the terms and conditions of the LSA, within two days of its receipt of a Customer Invoice, Greystone was required to wire the proceeds of the new loan in the amount of the corresponding Diesel Invoice. . . . The only express conditions prior to payment w [ere] a receipt of a Customer Invoice and availability of funds under the LSA. . . . - 8 - 1 Diesel, 2009 WL 2514033, at *2 2 emphases added). (citations to the record omitted; The court noted that Diesel's December 2 Letter expressly stated that "the [TPA] should only be applied to orders placed by GBMI upon receipt of a purchase order for product from a bona fide customer of Diesel Products." Although Greystone did not sign the December 2 Letter, it is undisputed that it would not have closed on the LSA if Diesel had not signed the December 2 Letter, and that Greystone agreed to the terms of the December 2 Letter by accepting the TPA and closing on the LSA. [Joint Pretrial Order] ~ 16. 3 4 5 6 7 8 9 10 11 12 13 Diesel, 14 omitted; emphasis ours) 15 contract claim on the 16 precedent "is generally disfavored," the district court found that 17 18 19 20 21 2009 WL 2514033, at *3 (other citations to the record Although noting basis of that nonperformance rejection of a of a condition in this case the words and actions of the parties demonstrate that all interested parties intended that the December 2 Letter make the Customer Purchase Order requirement a condition precedent to the operation of the TPA. 22 Diesel, 23 shipped shoes to GBMI that were not supported by Customer Purchase 24 Orders" the TPA simply did not 25 at *7: 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 2009 WL 2514033, at *13. It found apply to that these when Diesel shipments," The effective date of the TPA was December 4, 2006. At that time, there were 110,000 pairs of shoes being held at SNATT, Diesel's consolidator warehouse in Hong Kong, waiting to be shipped to the United States. Although the procedure set forth under TPA was supposed to cover all orders after its execution, GBMI paid for these shoes by letter of credit because it wanted fast delivery, and the formali ties required to implement the TPA were not yet in place on GBMI' s end. While Diesel contends "all parties" understood the rest of the shipments for the SS07 season would be paid for under the TPA, that does not appear to be what happened. Beginning in January 2007, Diesel began accepting orders from GBMI that were not supported by Customer - 9 - id. 11 Purchase Orders, understanding that the terms of the TPA would not apply to those shipments. Diesel opted to take the risk of accepting those orders because it was anxious to have its shoes distributed into the United States in time for the Fall/Winter 2007 (IIFW0711) season. . . . Diesel continued to ship to GBMI without requiring Customer Purchase Orders throughout the life of the TPA knowing full well that, based on the structure of the TPA and as made explicit in the December 2 Letter, those orders were not covered by the TPA. . . . 12 13 14 15 16 17 18 19 20 Because the TPA simply did not apply to these shipments GreYstone lacked any authority to lend funds to a third-party (such as Diesel) without the direct authorization of GBMI as its borrower under the LSA. . . . GBMI and Greystone' s actions under the LSA were consistent with this understanding--on 18 occasions, GBMI requested that Greystone wire revolver funds directly to Diesel in specified amountsi Greystone honored each instruction. 1 2 3 4 5 6 7 8 9 10 I 21 Diesel/ 22 record omitted; emphases added) 23 2009 WL 2514033/ at *6-*7 i (footnote and citations to the see also id. at *13. As to Diesel's claim against Greystone for breach of the 24 TPA notice provisions/ 25 indeed numerous occasions on which Greystone failed to give notice 26 of GBMI' s noncompl iance wi th the LSA. 27 had failed to carry its burden of showing that losses it suffered 28 from nonpayment for shoes it shipped to GBMI were caused by those 29 failures. 30 payments not only to Diesel but to other GBMI creditors as well/ 31 and 32 financial 33 received notice of GBMI defaults or of the current lack of funds 34 in the credit account sufficient to pay for shoes being shipped by 35 Diesel. the GBMI's court Greystone found problems, See/~, the district court found that there were that shipped credit Diesel/ shoes id. at *5-*7/ *12. - 10 - But it found that Diesel account with to was available awareness GBMI even of when for GBMI's it had There is no dispute that Diesel was well aware of GBMI's dire financial situation, and that it chose to take the business risk associated with continuing to ship shoes to GBMI, because it wanted to ensure a market for its footwear in the United States. . . . One example is the occasion on January 16, 2007, when Diesel sent a Notice Letter requesting a response under the Notice Provision of the TPA, but failed to wait the requisite two business days for a response from Greystone, and shipped over three-quarters of a million dollars worth of shoes that same day. To make the cheese more binding, the testimony revealed that on the two occasions when Diesel was notified of GBMI's defaults under the LSA, rather than discontinue its relationship with GBMI, it continued to ship goods. In February, over the four days following the first default notice, Diesel shipped $1.7 million worth of shoes. Thereafter, even though it knew GBMI was in financial difficulty and in default under the LSA, and that it had not been paid for its shipments, in the three months following the first notice of default, Diesel proceeded to ship over $13 million dollars worth of shoes to GBMI. After it received the second notice of GBMI's default on July 18, 2007, undeterred by GBMI's financial state, Diesel continued to ship shoes, shipping over $1 million worth of shoes in the ensuing two weeks. Diesel continued to ship shoes up until the day before it sent its notices to Greystone and GBMI of its intent to terminate the TPA and Distribution Agreements, almost two months after it received the second notice of default. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Id. at *12. The court noted testimony by Diesel witnesses who 34 testified that "had they received notice of any of the additional 35 instances 36 addition to the two notices of default actually received), 37 would not have continued to ship shoes to GBMI." 38 id. at *5. 39 by the events as 40 Diesel's "own actions and business decisions to continue to ship 41 shoes irrespective of GBMI's financial condition" constituted "an 42 intervening cause of [Diesel']s losses, of covenant breaches or lack of availability Id. i (in they see also But the court found that "this testimony [wa]s belied they actually unfolded, - 11 - II II at id. at *12. *5, and that 1 Addressing Diesel's alternative claims against Greystone, 2 the district court dismissed the claim for account stated, finding 3 that 4 statements of accounts owed not by Greystone, 5 id. 6 premised on Greystone's receipt from GBMI of proceeds of sales of 7 shoes for which payment was not made to Diesel, 8 that Greystone had not been enriched unjustly: the e-mails at *15. 9 10 11 12 13 14 15 16 17 on which Diesel relied for that claim were but by GBMI. As to the claim for unj ust enrichment, which was the court found The evidence in this case reveals the only benefit Greystone retained was to the extent it was, or could have been, repaid for loan funds disbursed to GBMI under the L8A. However, GBMI was obligated to repay Greystone for those loans. Equity and good conscience do not require a party to give up what it rightfully obtained, or is entitled to, under a contract. ([B]argained-for benefits cannot be deemed to unjustly enrich a contracting party.) 18 Diesel, 19 omitted) . 2009 20 WL 2514033, at *14 (internal The district court found merit, however, quotation marks in Greystone's 21 counterclaim for unjust enrichment against Props for lithe value 22 that 23 collateral," i.e., GBMI's 8808 Order Book. 24 rejected 25 entitled Props to the Order Book at the end of the 8808 sales 26 campaign. 27 of the termination of the Distribution Agreement [s] ," id. at * 9, 28 the court found that 29 30 31 32 Props unjustly Props's obtained contention that by the purloining Greystone's Id. at *16. Distribution The court Agreements Having found that the 8808 sales campaign "had ended as the facts show that Props purposely timed its notice of default so that the end of the 30-day cure period would coincide with the end of the sales campaign. . . . The Distribution Agreement nowhere - 12 - states that Props is entitled to the Order Book if the Agreement is terminated; Props timed its notice of default and termination to correspond exactly with the end of the sales period. The Court is not persuaded by Props's arguments that GBMI was required to provide it with the Order Book, 1 2 3 4 5 6 7 id. at *16. 8 enrichment damages in the amount of $572,616.75 plus $104,765.18 9 in interest, for a total of $677,381.93. 10 The court ordered Props to pay Greystone unj ust This appeal followed. II. 11 12 On appeal, DISCUSSION Diesel contends that the judgment dismissing 13 its claims against Greystone and holding it liable to Greystone 14 for unjust enrichment should be reversed--and that judgment should 15 be entered in its favor for some $17.3 to $19.3 million- -on the 16 grounds 17 inter 18 precedent to Greystone's obligation to make payments, finding that 19 Greystone' s 20 defaults were not the proximate cause of Diesel's losses, finding 21 that Props benefited from D-USA's use of GBMI' s Order Book, 22 failing to find that Props was contractually entitled to the Order 23 Book. 24 standard 25 affirmed insofar as it dismissed the claims of Diesel but reversed 26 insofar 27 enrichment. that alia, (~, of as the district finding failures that to court "abuse [d] there was give Diesel an its discretion" unperformed notice of in, condition many of GBMI IS and Diesel brief on appeal at 2-3.) Applying the normal review, judgment it held we conclude Props that liable - 13 - to the Greystone should for be unjust 1 A. Standard of Review 2 On an appeal from a judgment entered after a bench trial, 3 we review the district court's conclusions of law de novo. 4 ~,Giordano 5 v. Champlain Enterprises, Inc., 445 F.3d 610, 617-18, 623 (2d Cir. 6 2006) 7 1997) . 8 applicable, 9 ambiguous is a question of law. FDIC v. i v. Thomson, 564 F.3d 163, 168 (2d Cir. 2009) Providence College, Under New York law, 115 F.3d 136, 140 See, i Henry (2d Cir. which the TPAs provided would be the initial matter of whether a written contract is ,Law Debenture Trust See, 10 Co. of New York v. Maverick Tube Corp., 595 F.3d 458, 465 (2d Cir. 11 2010) 12 2009) 13 Insurance Co., 309 F.3d 76, 83 (2d Cir. 2002). The meaning of an 14 unambiguous contract law. 15 Revson v. Cinque & Cinque. P.C., 221 F.3d 59, 66 16 K. Bell & Associates, 17 637 (2d Cir. 1996) 18 959 F.2d 425, 429 (2d Cir. 1992). JA Apparel Corp. i i 19 International i v. Abboud, Multifoods is 568 F.3d 390, Corp. v. 396 (2d Cir. Commercial likewise a matter of Union See,~, (2d Cir. 2000); Inc. v. Lloyd's Underwriters, 97 F.3d 632, Seiden Associates, Inc. v. ANC Holdings, Inc., When the district court as factfinder is confronted with a 20 contract provision 21 consider evidence extrinsic to the contract, including testimony 22 offered by Amusement 23 Underwriters v. American International Group, Inc., 66 N.Y.2d 878, 24 880-81, 25 Franklin National Bank, 37 N.Y.2d 245, 248, 371 N.Y.S.2d 915, 918 498 that is not the parties. N.Y.S.2d 760, unambiguous, id. ~, 763 (1985) - 14 - i i 67 it Wall may Street properly Business Co. v. 1 (1975) (evidence of "surrounding facts and circumstances" to show 2 the parties' 3 light of such evidence, 4 See,~, 5 Time Products, 6 1994); 7 573 The meaning of an ambiguous provision, Revson v. Ltd. in is a question of fact for the factfinder. Cinque v. Cons arc Corp. Cinque, & Toy Biz, v. P.C., Inc., 221 F.3d at 38 F.3d 660, Marine Midland Bank, N.A., 665 66; In (2d Cir. 996 F.2d 568, (2d Cir. 1993). 8 9 intent). After a bench whether based on oral [they are] trial, the court's or other evidence, "[f] indings must Fed. R. fact, not be set aside Civ. P. 52 (a) (6); 10 unless 11 see,~, Anderson v. Bessemer City, 470 U.S. 564, 573-74 12 Banker v. Nighswander, 13 Cir. 14 findings 15 evidence, or on inferences from other facts. 16 470 U.S. at 574; Petereit v. S.B. Thomas, Inc., 63 F.3d 1169, 1176 17 (2d Cir. 1995). 1994) clearly erroneous." of Martin & Mitchell, 37 F.3d 866, (1985); 870 (2d The" clearly erroneous" standard applies whether the are based on on documentary See,~, erroneous, 20 court's opportunity to judge the witnesses' credibility." 21 Civ. P. 52 (a) (6). 22 as the trier of fact to decide whose testimony should be credited. 23 See,~, 24 just 25 County, 26 Rensselaer, required to "give 147 jury would F. 3d 783 due regard are to clearly the trial Fed. R. It is within the province of the district court Anderson, 470 U.S. at 574. a findings Anderson, 19 are factual or In we whether testimony, 18 as deciding witness be, see, 153, 160 (2d F.2d 319, 325 The court is also entitled, ~, Cir. (2d Cir. - 15 - Robinson 1998); 1986), v. Fiacco cert. Cattaraugus v. City denied, of 480 1 U.S. 922 2 of the testimony of any given witness. 3 second-guess 4 Anderson, 470 U.S. at 573-74. 5 (1987), to believe some parts and disbelieve other parts the Further, court1s II credibility We are not allowed to assessments. [w] here there are two permissible views of the 6 evidence, the factfinder's choice between them cannot be clearly 7 erroneous. II 8 U.S. 338, 342 (1949). 9 to support an inference contrary to that drawn by the trial court rd. at 574; see United States v. Yellow Cab Co., 338 The fact that there may have been evidence 10 does not mean that the findings made are clearly erroneous. 11 ~,Palazzo 12 Chelsea Resources, Ltd., 947 F.2d 611, 618-19 (2d Cir. 1991). 13 14 15 16 17 18 19 20 21 22 23 [W] hen the district court is sitting as trier of fact, it has no obligation to draw a given inference merely because it is supportable; nor has it any obligation, in its capacity as trier of fact, to view the evidence in the light most favorable to [a particular party]. The obligations of the court as the trier of fact are to determine which of the witnesses it finds credible, which of the permissible competing inferences it will draw, and whether the party having the burden of proof has persuaded it as factfinder that the requisite facts are proven. 24 v. Corio, 232 F.3d 38, 44 (2d Cir. 2000) i See, Healey v. Cifra v. General Electric Co., 252 F.3d 205, 215 (2d Cir. 2001). 25 Given the standards governing our review of the district 26 court1s rulings after the bench trial, we have little difficulty 27 in concluding 28 affirmed. 29 ruling that Greystone was entitled to unj ust enrichment damages 30 from Props. that the rej ection of Diesel r s claims should be We reach the opposi te conclusion wi th respect to the - 16 - 1 B. The Dismissal of Diesel's Contract Claims against Greystone In 2 order to recover plaintiff a prove, defendant by a for breach preponderance of of 3 contract, a 4 evidence, ( 1) the existence of a contract between itself and that 5 defendant i 6 the contract i 7 (4) 8 See,~, 9 Trust Co. of New York, (2) must from the performance of the plaintiff's obligations under (3) breach of the contract by that defendant; and damages to the plaintiff caused by that defendant's breach. Eternity Global Master Fund Ltd. 375 F. 3d 168, 177 v. Morgan Guaranty (2d Cir. 2004) i Harsco 10 Corp. v. Segui, 91 F.3d 337, 348 (2d Cir. 1996). 11 essential element of damages in a breach of contract action; and, 12 as 13 directly and proximately caused his or her damages." 14 Market Share v. Sterling National Bank, 392 F.3d 520, 525 (2d Cir. 15 2004) 16 Wilson Manufacturing 17 (1886) . 18 result of other intervening causes." 19 Market Share v. Sterling National Bank, 392 F.3d at 526; Kenford 20 Co. v. County of Erie, 67 N.Y.2d 257, 261, 21 (1986) . 22 in tort, a plaintiff must (emphasis in original); Co., prove see, that a 205, defendant's breach Wakeman v. ~, 101 N.Y. "Causation is an 209, 4 N.E. National Wheeler 264, & 266 Recovery is not allowed if the claimed losses are "the The dist for Id.; see, ~, National 502 N.Y.S.2d 131, 132 ct court concluded that Diesel's claim against 23 Greystone breach of the TPA 24 dismissed for lack of sufficient proof that the failures to give 25 Diesel notice of many of GBMI's defaults caused Diesel's losses. 26 Although Diesel argues that this was error because its witnesses - 17 - notice provisions should be 1 testified that Diesel would have ceased shipping shoes to GBMI if 2 Greystone 3 court's refusal to credit that testimony was entirely permissible. 4 The court found, inter alia, that in January 2007, Diesel faxed a 5 request 6 business days but did not 7 shipping more than three-quarters of a million dollars worth of 8 shoes to GBMI on the day of the inquiry; that in February 2007, in 9 the four days following its receipt of a notice from Greystone 10 that GBMI was in default, 11 worth of 12 notice of default, Diesel sent GBMI more than $13 million dollars 13 worth of 14 received notice of another GBMI default, Diesel shipped GBMI more 15 than $1 million worth of shoes; and that Diesel was still shipping 16 shoes to GBMI on September 3, 17 the 18 supported by documentary evidence, and the court as factfinder was 19 entitled to find that the testimony of Diesel I s witnesses--that 20 Diesel would have stopped shipping had it received any additional 21 notices of default--was not 22 belied by the events as they actually unfolded, 23 2514033, at *5. 24 as 25 erroneous. had notified Diesel to Greystone shoes; shoes i conditional to causation, that that for of GBMI each of GBMI default in July 2007, of 2007, defaults, within response, shipped to GBMI in the three months notice S information bother to await a Diesel I the two instead $1.7 million following that first in the two weeks after it one day before sending GBMI termination. credible, as These that findings testimony I! I! are [wa] s Diesel, 2009 WL The court correctly applied the legal principles and its findings of fact are not clearly There is thus no basis for overturning its ruling that - 18 - 1 Diesel failed to prove the causation element of its claim against 2 Greystone for breach of the TPA notice provisions. 3 The district its court claim that concluded Greystone that Diesel breached the failed 4 establish 5 provisions because, 6 relevant copies of Customer Purchase Orders, receipt of which the 7 court found was a condition precedent to Greystone's duty to pay. 8 A contract imposes a condition precedent when it provides that "an 9 act or event, other than a lapse of time," unless excused, inter alia, Greystone had not TPA to payment received the "must 10 occur before a duty to perform a promise in the agreement arises." 11 Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 86 N.Y.2d 685, 12 690, 13 omitted) 14 for its validity on the manifested intention of the parties, 15 has 16 (quoting 5 Williston, Contracts 17 this case, the December 2 Letter provided that the TPA would "only 18 be applied to orders placed by GBMI upon receipt of a purchase 19 order for product from a bona fide customer of Diesel Products." 20 And in the TPAs, GBMI agreed that it would not order shoes from 21 Diesel before receiving such a Customer Purchase Order and agreed 22 to 23 Greystonei Diesel "agree[d] 24 any 25 Invoice')" 26 delivered prior to the delivery of the products ordered by the 636 N.Y.S.2d 734, 737 (1995) (internal quotation "'Since an express condition [precedent] the same sanctity as provide invoice copies for and of its the promise itself.'" § . depends Id. orders to it at 690-91 669, at 154 (3d ed. 1961)) such purchase both Diesel In and to provide [Greystone] with a copy of products "agree[d] marks that delivered each - 19 - to Diesel [GBMI] Invoice (a 'Diesel shall be 1 applicable Diesel Customer to [GBMI]" 2 TPAs provided that Greystone would be obligated to make payment to 3 Diesel 4 invoice to a Diesel customer "in the amount of the corresponding 5 Diesel Invoice. after GBMI furnished Greystone with a copy of a The GBMI 1I The district court / 6 (emphasis in original). somewhat having determined that the contract 7 documents were ambiguous 8 Purchase Order 9 Greystone's duty to pay Diesel/ admitted extrinsic evidence as to requirement as was to a whether condition the Customer precedent to 10 the parties' 11 the 12 precedent/ 13 Diesel to GBMI stating that 14 "GBM! orders to Diesel submitted prior to confinnation of GBM! 15 customers 16 should be 17 originali second emphasis added)/ 18 Diesel was paid for shoes it shipped pursuant to a GBMI order that 19 was not preceded by a Customer Purchase Order, 20 through a different mechanism, not through the TPAs. 21 Customer intent. The court found that the parties intended Purchase based on/ orders Order requirement inter alia/ are assisted by a a to March 2007 be a e-mail condition sent by "under the current agreements," any not sub; ect letter of to credit" the tripartite (first emphasis and in and evidence that in fact when Diesel was paid We see no error in the district court's determination that 22 the contract documents were ambiguous 23 light of the evidence, we see no clear error in its finding that 24 the parties intended that satisfaction of the Customer Purchase 25 Order requirement be a condition precedent to Greystone's duty to 26 make payments from GBMI's credit account to Diesel. - 20 - in this regardi and/ in As there is 1 no dispute that that condition was not fulfilled, Diesel's claim 2 against 3 respect to those shipments was properly dismissed. 4 C. Greystone for failure to make payments to Diesel with The Dismissal of Diesel's Other Claims 5 Diesel's challenges to the district court's posttrial 6 dismissal of its other claims do not require extended discussion. 7 In light of the agreements among the parties, the district court 8 properly dismissed Diesel's claims that it was entitled to recover 9 from Greystone for unjust enrichment as a result of GBMI's 10 receiving Diesel shoes for which Diesel was not paid. 11 of unjust enrichment lies as a quasi-contract claim. 12 obligation 13 Goldman v. Metropolitan Life Insurance Co., 5 N.Y.3d 561, 572, 807 14 N.Y.S.2d 583, 587 (2005) 15 Corp., 16 v. Long Island R.R. Co., 70 N.Y.2d 382, 388, 521 N.Y.S.2d 653, 656 17 (1987) 18 governing 19 recovery in quasi 20 subject matter."). the law creates i 377 F.3d 209, 213 in the ~, see, absence of "The theory any It is an agreement. II In re First Central Financial (2d Cir. 2004) i Clark-Fitzpatrick, Inc. (liThe existence of a valid and enforceable written contract 21 a particular subject contract for matter ordinarily events arising out of precludes the same The court also properly dismissed Diesel's claims against 22 Greystone for account 23 depends on 24 parties, or an express agreement 25 account stated. lithe stated. existence of The viability of some indebtedness to treat the such a between claim the statement as an It cannot be used to create liability where none - 21 1 otherwise exists. M. 2 Contracting Corp., 247 A.D.2d SIS, 516, 669 N.Y.S.2d 318, 319 (2d 3 Dep't 1998). 4 Diesel relied for this claim were statements of amounts owed to 5 Diesel by GBMI, 6 erroneous. 7 Greystone' s liability under the TPAs for the unpaid amounts, 8 account-stated claim against Greystone is untenable. II Paladino, Inc. v. Lucchese J. & Son The district court found that the e-mails on which not by Greystone, a finding that is not clearly Further , given that Diesel has failed to establ ish an 9 Finally, we note Diesel's contention that if the dismissal 10 of its claims against Greystone is upheld on the basis that GBMI 11 failed to perform a condition precedent to Greystone I s 12 pay, GBMI should be held liable for breach of the TPAs. 13 one-paragraph presentation of 14 citation to the record nor a citation of law and provides us with 15 no basis for reversal. 16 that 17 Diesel 18 obligation to pay, GBMI's failure to provide such purchase orders 19 did 20 2514033, at *14 n.13. 21 as 22 despite GBMI's failure to supply those documents, Diesel persisted 23 in making many millions of dollars worth of shipments to GBMI. although and not Diesel GBMI' s is was a argument In any event, delivery Greystone constitute this a of Diesel's contains neither a the district court found Customer Purchase condition precedent material duty to breach. See Orders to to Greystone' s Diesel, 2009 WL The finding of lack of materiality insofar concerned is supported 22 - by the very fact that, 1 D. The Award of Unjust Enrichment Damages to Greystone 2 In order to 3 under New York law, 4 was enriched, 5 conscience 6 plaintiff is 7 Pictures, Inc., 8 544 U.8. 949 (2005) 9 434 succeed a on a claim plaintiff must for unjust prove that enrichment "(1) defendant (2) at plaintiff's expense, and (3) equity and good militate against permitting defendant to retain what seeking 373 (2d Cir. 2009) i to recover. F.3d 296, see, Kaye v. i 306 ~, Briarpatch Ltd. II (2d Cir. denied, Nordwind v. Rowland, 584 F.3d 420, Grossman, In the present case, Phoenix cert. 2004), v. 202 F.3d 611, 616 (2d Cir. 10 2000). 11 was unjustly enriched by its receipt of the GBMI Order Book for 12 8808 13 GBMI, 14 all of GBMI's assets, 15 the Distribution Agreement did not give Props the right to receive 16 the GBMI Order Book upon the Distribution Agreement's termination, 17 see Diesel, 18 had a 19 relevant time, and that right was superior to Greystone's security 20 interest. upon the the district court ruled that Props termination of the agreements with Greystone and reasoning that Greystone had taken a 21 including the Order Book, 2009 WL 2514033, contractual right In general, security interest in to at *16. receive and stating that We disagree because Diesel the 8808 Order Book at when the question is the IIpriority between a 22 secured creditor and 23 preceded 24 8eptembertide Publishing, B.V. v. Stein & Day, Inc., 25 682 26 Clearing Co., (2d it, Cir. a [a person] whose interests in the collateral first 1989) 182 the in time, first (IISeptembertide ll A.D.2d 245, 249, - 23 - ) in i 586 right Fallon rule v. N.Y.S.2d applies. II 884 F.2d 675, Wall 953, 8treet 956 (1st 1 Dep't 1992) ("Fallon"). 2 that an assignee stands in the shoes of its assignor and takes 3 subject 4 existence 5 security 6 cannot claim rights in the property that were not the assignor's 7 to give." to those prior liabilities to interest "It has always been the law in New York the in of its assignment"; its assignor and, assignor's that property, in "in thus, were taking a [the assignee] Septembertide, 884 F.2d at 682. 8 A later-in-time assignee can have priority over a claimant 9 whose right was created earlier only if the later assignee was a 10 "bona fide purchaser." 11 at 956. 12 takes 13 claim' is not limited strictly to an adverse ownership interest, 14 but 15 knowledge Thus, when a 16 creditor takes a security interest in collateral to which knows 17 a third party has even an unperfected contract right, 18 that 19 liabilities," and the "acquired interest [ils secured only to the 20 extent 21 interest." 22 (creditor 23 debtor's 24 proceeds that an earlier contract had assigned to a third party) . 25 26 Fallon, 182 A.D.2d at 249, 586 N.Y.S.2d But "that status cannot be attained where the transferee with knowledge of rather could of in this violation of an i agreement." interest [the . who claim" include, securi ty that an adverse i assignor] see, ~, acquired "contract "subj ect a rights had an and context, to "[a] n 'adverse any transfer with Id. [those] unencumbered, it takes pre existing transferable Septembertide, 884 F. 2d at 677, 681-82 security and interest accounts" was in not "all ll of entitled the to In the present case, the pertinent Distribution Agreement was entered into in 2005. Defining Props as the "Company" and - 24 - 1 GBMI as the "Distributor," that agreement provided that "within 15 2 (fifteen) days from the end of each Sales campaign the Distributor 3 shall communicate to the Company the list of the Sales Outlets and 4 the relevant orders collected," i.e., the GBMI Order Book for that 5 sell ing season. 6 campaign 7 Agreement[s].11 8 acquired its security interest in GBMI 9 into the LSA in 2006, had The district court ended as of Diesel, the 2009 found that the SSO 8 "sales termination WL 2514033, I S of at the Distribution *9. Greystone assets when it entered and it is undisputed that Greystone had 10 knowledge of the Distribution Agreements at that time. 11 made 12 Props; and the TPA made express reference to the 2005 Distribution 13 Agreement. 14 entitled Props to receive GBMI's records of customers and orders 15 for Props products at the end of each sales campaign, Greystone's 16 later-acquired security interest in GBMI's assets was subordinate 17 to Diesel's right to receive the Order Book at the close of each 18 such campaign. express As The 19 reference the district to the TPA preexisting court Props instead Greystone, GBMI, Distribution described having noting the apparent 22 receipt of the Order Book as 23 noting 24 efforts to conceal its possession of the Order Book. 25 The court suggested that Props had no right to the SS08 Order Book 26 because it had timed its termination of the Distribution Agreement testimonial and by Props e-mails II f *16, as 21 reflected at Agreement "purloin [ed] glee collateral, Props and 20 II Greystone's among The LSA referring to Props's Christmas'" coming '" early, '" and documentary - 25 - evidence that Props made Id. at *10. 1 to coincide with the end of the sales campaign, 2 But the district court did not find--nor does Greystone contend, 3 and nothing in the record suggests--that Props did not have the 4 right to terminate the Distribution Agreement when it did. 5 the provision in that agreement giving Props the right to receive 6 GBMI's 7 campaign 8 reaction to receiving the Order Book following the Distribution 9 Agreement's 10 customer was and order unambiguous, termination, records extrinsic was at the end evidence, inadmissible see id. at *16. to of such vary And as each as sales Props's the plain meaning of the contract provision. 11 In sum, because right, the 13 GBMI I s 14 termination of the Distribution Agreement coincided with the end 15 of that sales campaign, 16 to the creation of Greystone's security interest in GBMI assets, 17 and 18 Agreement when it entered into the L8A, Props did not receive the 19 Order Book at Greystone's expense, and equity and good conscience 20 did not militate against allowing Props to enjoy the benefit of 21 its bargained-for contract right. 22 dismissed Greystone's counterclaim. (d) of the end of the Distribution Agreement gave Props 12 list at (a) sales the 8808 outlets sales and orders campaign, for Props to receive shoes, (b) (c) Diesel's contract right existed prior Greystone was aware of the existence of the Distribution - 26 - The district court should have 1 CONCLUSION 2 We have considered all of the parties' contentions on this 3 appeal and, for the reasons stated above, have found merit only in 4 Greystone's arguments supporting the dismissal of Diesel's claims 5 and in Props's challenge to the award of unjust enrichment damages 6 to Greystone. 7 court as awarded damages to Greystone. 8 judgment is affirmed. 9 We reverse so much of the judgment of the district In all other respects, the Each side shall bear its own costs of this appeal. - 27 -
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