Intertex Apparel, Ltd. v Max Rave, LLC

[*1] Intertex Apparel, Ltd. v Max Rave, LLC 2007 NY Slip Op 52155(U) [17 Misc 3d 1126(A)] Decided on November 13, 2007 Supreme Court, New York County Acosta, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on November 13, 2007
Supreme Court, New York County

Intertex Apparel, Ltd., Plaintiff,

against

Max Rave, LLC, Defendant.



600247/07



Kucker & Bruh, LLP

747 Third Avenue, 12th Floor

New York, NY 10017

Attorneys for Plaintiff

Aaronson Rappaport Feinstein & Deutsch, LLP

757 Third Avenue

New York, NY 10017

Attorneys for Defendant

Rolando T. Acosta, J.

Background [FN1]

The parties dispute some of the basic facts underlying this action and in general, issues of fact abound. Plaintiff, a manufacturer and importer of branded and private label apparel, asserts that it executed a contract with defendant for the sale of $446,480 worth of merchandise. According to plaintiff, the contract for these goods was in the form of five purchase orders. As proof of the contract, plaintiff offers evidence in the form of purchase orders and emails, as follows.

For styles E35104MR and E35102MR, plaintiff submits: 1. a purchase order, dated March 3, 2006; 2. an email regarding E35104MR dated January 12, 2006 from Nilvia Melendez, defendant's employee, stating "Approved w. comments pls see attached and submit pp samples on all colors for reference and review"[FN2]; and 3. a string of emails beginning with an email dated December 15, 2005 from defendant's employee, Nilvia [*2]Melendez, regarding E35102MR, stating "Approved w. corrections, pls submit pp samples asap showing corrections." Next in the chain is an email from plaintiff's employee stating: "SY, PLEASE ADVISE THAT YOU HAVE RECEIVED THE GRADED SPEC THAT WAS APPROVED PRIOR, AND THAT WE WILL FOLLOW THE APPROVED SPECS THAT WE HAD. THANKS, SHARON." And finally, an email dated April 11, 2006, in which Sy Sainato, defendant's employee writes to Sharon Defato-Reese, plaintiff's employee "Hi Sharon - Yes, go ahead. It is apprvd." See, Plaintiff's Affirmation of Andrew Bittens, Exhibits C-E.

Plaintiff offers similar evidence for E35103, in the form of a purchase order and an email from defendant's employee, Nilvia Melendez, dated December 28, 2005 stating, "Approved w. comments-submit PP samples on all color washes for reference and corrections...Pls confirm rcpt and that all fit comments are clear."See, Plaintiff's Affirmation of Andrew Bittens, Exhibits F and G.

With respect to the above three items (E35102, E35103, and E35104), plaintiff asserts that defendant unconditionally approved the orders and that an enforceable contract for the goods resulted. Defendant, on the other hand, maintains that although the three orders were approved for fit, final approval was conditioned on the defendant's approval for style, which never occurred.

As to the remaining two orders, (E35120MR and E35124MR/MT [FN3]), plaintiff offers purchase orders signed by defendant's buyer, Cindy Bryant, and faxed to plaintiff's place of business. See, Plaintiff's Affirmation of Andrew Bittens, Exhibits H and I. In the meantime, defendant underwent a change in corporate name, and so reinstated the purchase orders for items E35102, E35103, E35104 and E35124, under its current name, Max Rave, LLC. Plaintiff alleges that defendant also reinstated the purchase order for item E35120, however conspicuously missing, is proof of such reinstatement.[FN4] [*3]

Finally, according to plaintiff, the merchandise was shipped to defendant on May 15, 2006, however defendant wrongfully rejected the merchandise.

Defendant, a women's clothing retailer, has a considerably different version of the facts. According to defendant, it approved purchase orders for three items for fit (i.e. E35104MR, E35102MR, and E35103), but never for the style of these three items, thus, defendant argues, precluding formation of a contract. Furthermore, defendant claims they never approved the other three items for either fit or style.[FN5]

As to the three items that defendant did approve for fit, defendant asserts they cancelled these orders in accordance with the terms found on the back of the purchase orders and with the custom and practice in the industry requiring approval of a production sample for style as a condition precedent to the formation of a contract. Plaintiff disputes that they ever received the terms and conditions of the purchase order and also alleges that defendant submitted a wrongly transcribed version of the terms. Plaintiff also asserts that neither the terms of the contract nor the custom and practice of the industry, permit defendant to "unilaterally cancel" the contract.

Defendant also contends that there was no formation of a contract because according to the custom and practice of the industry as well as the parties' prior dealings, an appointment for delivery of the goods was never scheduled, as required. According to defendant, setting an appointment is a condition precedent to contract formation. Plaintiff disputes this as well, alleging that the defendant in bad faith prevented delivery of the goods.

Finally, defendant posits that if there were a contract for the goods, after plaintiff's delivery of the goods failed, the parties entered into a modification of the original contract (alternatively characterized by defendant as an accord and satisfaction) whereby defendant agreed to purchase a test amount of the clothing items, but no more. The implication is that plaintiff waived its rights to enforce the underlying contracts involved in this action. Importantly, plaintiff's reply admits that a central figure to this dispute, Sandra Price (plaintiff's employee), is unavailable to clarify the disputed facts. Defendant claims it communicated the cancellation of the contract to Ms. Price, and plaintiff disputes this key allegation. Defendant also alleges that Ms. Price was a party to the [*4]modification/accord and satisfaction of the agreement, therefore, her deposition and testimony are central to a resolution of the facts in this case and summary judgment is precluded.[FN6]

Analysis of Motion for Summary Judgment

It is a well established legal principle that in a motion for summary judgment, the evidence will be construed in the light most favorable to the resisting party. Fundamental Portfolio Advisors, Inc. v Tocqueville Asset Mgt., L.P., 7 NY3d 96, 106 (2006). The proponent of a motion for summary judgment must establish that "there is no defense to the cause of action or that the cause of action or defense has no merit," (C.P.L.R. §3212[b]), sufficiently to warrant the court as a matter of law to direct judgment in his or her favor. Bush v. St. Claire's Hospital, 82 NY2d 738, 739 (1993); Winegrad v. New York University Medical Center, 64 NY2d 851, 853 (1985). This standard requires that the proponent of the motion "tender[] sufficient evidence to eliminate any material issues of fact from the case," Id., "by evidentiary proof in admissible form." Zuckerman v. City of New York, 49 NY2d 557, 562 (1980). Moreover, in deciding a motion under C.P.L.R. §3212, the court's duty is not to resolve issues of fact or determine matters of credibility but merely to determine whether such issues exist. Barr v. County of Albany, 50 NY2d 247 (1980).

Where the proponent of the motion makes a prima facie showing of entitlement to summary judgment, the burden then shifts to the party opposing the motion to demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action, or to tender an acceptable excuse for his or her failure to do so. Vermette v. Kenworth Truck Company, 68 NY2d 714, 717 (1986); Zuckerman v. City of New York, supra, 49 NY2d at 560, 562. Like the proponent of the motion, the party opposing the motion must set forth evidentiary proof in admissible form in support of his or her claim that material triable issues of fact exist. Id. at 562.

New York's Uniform Commercial Code - Sales provisions and general contract principles govern this action. Under these laws, to make out a claim for breach of [*5]contract, plaintiff must establish the (1) formation of a contract between plaintiff and defendant, (2) performance by plaintiff, (3) defendant's failure to perform, and (4) resulting damage. Furia v. Furia, 116 AD2d 694 (2nd Dep't 1986).

The U.C.C. employs a very liberal standard for sales contract formation, but it is not unbridled. For example, U.C.C. § 2-204 finds a sales contract from the parties' conduct. Here, plaintiff has offered purchase orders signed by defendant's buyer and emails exchanged between plaintiff and defendant concerning these purchase orders. With the exception of style E35102 [FN7], the plaintiff's proofs do not conclusively establish that defendant ordered the merchandise. The purchase orders and emails provided, which state "approved," have conditions attached instructing plaintiff to change specifications and provide production samples. There is no evidence that the specifications were changed and that defendant was provided with production samples for any of the items, except E35102. Furthermore, defendant argues that the custom and practice of the industry and the parties' prior dealings require the buyer to see and approve a production sample before an enforceable contract can result. Moreover, the approved purchase orders are only evidence of defendant's approval of the fit, not the style of the merchandise, which according to defendant is also industry standard. Finally, defendant counters that because the plain language of the purchase orders required an appointment to be made two days before delivery, the fact that plaintiff did not receive a routing clearance date precluded the formation of a contract. Plaintiff's response denying receipt, and thus notice, of the terms of the order simply creates more issues of fact.

Due to the outstanding questions regarding the terms of the contracts, the parties' prior dealings, and the plaintiff's failure to fully refute the defendant's contention that the custom and practice of the industry requires approval of a production sample prior to the formation of a contract, plaintiff has failed to establish a prima facie case for breach of contract on the papers alone.

Even if plaintiff had established a cause of action for breach of contract, defendant has raised many triable questions of fact precluding summary judgment. To start, defendant raises the defenses of waiver, modification and accord and satisfaction under U.C.C. § 2-209. These defenses require the Court to look at the intent of the parties. Intent is clearly a question of fact. Denburg v. Parker Chapin Flattau & Klimpl, 82 NY2d 375, 384 (1993) ("[w]hether a particular arrangement is an accord or a substituted [*6]agreement hinges on the parties' intent"); and see, Mallad Const. Corp. v. County Fed. Sav. & Loan Ass'n, 32 NY2d 285, 291 (1973) (it is a question of fact when "the intent must be determined by disputed evidence or inferences outside the written words"); and see, Navillus Tile, Inc. v. Turner Const. Co., 2 AD3d 209 (1st Dep't 2003) (it is a genuine issue of fact whether subcontractor surrendered its rights upon signing numerous partial releases). From the evidence presented, the Court can not glean the parties' agreement, if there was one, to modify or cancel the orders.

Turning to plaintiff's auxiliary argument that defendant should have pled the affirmative defenses of waiver and improper shipping of the goods in the answer, the Court finds that in sum and substance the defendant's pled defenses (accord and satisfaction and cancellation) and those raised in the instant motion are equivalent. To be sure, defendant's newly stated defense of improper shipping of the goods is equivalent to the defendant's pled defense of cancellation since defendant is alleging that the plaintiff's improper shipping violated the terms of the purchase order, thereby leading to cancellation of the contract, by its terms. Similarly, defendant's newly stated defense of waiver is equivalent to accord and satisfaction, since, according to defendant, the accord and satisfaction waives the plaintiff's rights to collect damages.

Therefore, the Court does not find that amendment of the defendant's verified answer is necessary since the current answer includes the substance of defendant's defenses and plaintiff has notice of such defenses. See C.P.L.R. § 3026 (requiring liberal construction of pleadings).

Analysis of Cross-Motion

Defendant filed a cross motion requesting dismissal or preclusion due to plaintiff's willful failure to provide discovery based on C.P.L.R. § 3126 or in the alternative, to compel discovery pursuant to C.P.L.R.§ 3124.

The parties differing accounts of the facts at issue not only preclude summary judgment but make it clear that discovery is necessary. Among other things, the Court is unable to ascertain the terms of the agreement, whether there was a final agreement, the intent of the parties to modify their original dealings, or whether the defendant's alleged cancellation of the contract took place or was properly communicated to plaintiff. In its papers, plaintiff cites to Pow v. Black, 182 AD2d 484 (1st Dep't 1992), for the proposition that the Court must grant summary judgment since discovery would not create issues of fact. Pow, however, is distinguishable inasmuch as here, defendant has met the threshold requirement of demonstrating that given the opportunity to depose certain witnesses (e.g. Sandra Price), defendant could prove its affirmative defenses. The fact [*7]that a key witness is unavailable at this time and that neither party has offered her version of the events, makes this case highly distinguishable from Pow and thus, precludes summary judgment.

As a final matter, while it is true that under 22 N.Y.C.R.R. § 202.7, a party requesting discovery in opposition to a summary judgment motion should file a good faith affirmation, this Court is unwilling to grant summary judgment when absolutely no disclosure has been conducted and the defendant has provided copies of the demands for discovery they have served on the plaintiff. See, Defendant's Cross-Motion, Exhibit A.

Since many genuine, triable issues of fact exist and disclosure would clarify these matters, defendant is entitled to discovery. C.P.L.R. § 3212(f); and see, Boston Concessions Group, Inc. v. Criterion Center, 200 AD2d 543 (1st Dep't 1994) (summary judgment precluded "because there has been no discovery and the conflicting affidavits of the parties and their representatives, based upon personal knowledge of the underlying commercial dispute, which raise issues of credibility, indicate that genuine material issues of fact exist requiring a trial with respect to the plaintiff's causes of action for conversion and breach of contract"); but cf., Fulton v. Allstate Ins. Co., 14 AD3d 380 (1st Dep't 2005) (where the parties had already engaged in some discovery and the court found the resisting party's omission of a good faith affirmation to be a basis for granting partial summary judgment and limiting the motion to compel discovery).

Accordingly, based on the foregoing, it is hereby

ORDERED that plaintiff Intertex Apparel, Ltd.'s motion for summary judgment is denied without prejudice to renew at a later time; and it is further

ORDERED that defendant's cross-motion for dismissal or preclusion based on C.P.L.R. § 3126 is denied; and it is further

ORDERED that defendant's motion pursuant to C.P.L.R. § 3124 is granted to the extent of setting down the matter for a preliminary conference to be held on November 29, 2007 at 9:30am.

This constitutes the Decision and Order of the Court.

ENTER

Dated: November 13, 2007______________________________

Rolando T. Acosta, J.S.C. [*8]

Kucker & Bruh, LLP

747 Third Avenue, 12th Floor

New York, NY 10017

Attorneys for Plaintiff

Aaronson Rappaport Feinstein & Deutsch, LLP

757 Third Avenue

New York, NY 10017

Attorneys for Defendant Footnotes

Footnote 1:This decision has been edited for publication.

Footnote 2:The email contains an EXCEL spreadsheet attachment where the defendant notes on page 2, under Comments, "Fit is approved following the below comments. Pls submit PP sample on all color washes for our review." And further down on the same page, defendant notes "Pls note that the belt loops are shifting towards wearer's right at CB, pls make sure that the loops are centered correctly going forward...Pls ensure that studs and trims are securely place going forward...Note to contact the buyer for piece goods, color wash and artwork approval...Pls maintain updated specs and ensure that all areas remain within tolerance." See, Plaintiff's Affirmation of Andrew Bittens, Exhibit D.

Footnote 3:E35124MR/MT represents two separate items for denim jackets and white twill jackets.

Footnote 4:It is possible that the purchase order found at Plaintiff's Affirmation of Andrew Bittens, Exhibit H is submitted as proof of the reinstatement of item E35120. However, plaintiff has not described this exhibit as such, so the Court is disinclined to infer this as evidence of reinstatement due to the illegibility of the purchase order and the fact that the Court was provided evidence of the reinstatement of all the other items together, excluding E35120. Furthermore, at Plaintiff's Affirmation of Andrew Bittens, Exhibit L, E35120 is also omitted from the list of items mentioned by plaintiff's public carrier, Uri Bornstein. Presumably, however, plaintiff's position with respect to item E35120 would be that its reinstatement was unnecessary to evidence the existence of a contract.

Footnote 5:Defendant's contention is further bolstered by a copy of a purchase order for E35124MR/MT ("white stretch twill") which was submitted to the Court on October 25, 2007, showing a clear stamp reading "A sample for reference for each color ordered must be provided within three days of receipt of this purchase order. In addition, this order requires a samples to be sent for fit evaluation." This purchase order is also clearly marked "canceled."

Footnote 6:It must be stated clearly that the Court finds incredible that plaintiff states in Marc Setton's Reply Affidavit in Support of the Summary Judgment motion that Ms. Price is a "former employee of plaintiff", Id. ¶ 6, and then subsequently states that Ms. Price is "currently out of country until after this motion is to be submitted and thus unable to provide an affidavit ..." Id. ¶ 8. Ms. Price, a manager in plaintiff's company, to whom defendant alleges cancellation was "clearly communicated" should surely be made available to resolve this dispute.

Footnote 7:For style E35102, plaintiff does offer evidence in the form of an email exchange between plaintiff and defendant in which it seems that the production sample was provided and ultimately approved.