Tofa Jewelry Inc. v Silver Stars Inc.
Annotate this CaseDecided on March 9, 2009
Civil Court of the City of New York, New York County
Tofa Jewelry Inc., Plaintiff,
against
Silver Stars Inc., Defendant.
058481/08
Appearing for plaintiff:
Patrick Haughey, Esq.
for Meyer, Saxon & Cole
3620 Quentin Rd.
Brooklyn, NY 11234
718-339-3330
Appearing for defendant:
Joseph R. Sahid, Esq.
Law Offices of Joseph R. Sahid
1065 Park Avenue
New York, NY 10128
646-657-0486
Barbara Jaffe, J.
In an action commenced on or about July 16, 2004, plaintiff sues to recover from defendant $18,541.20 for goods sold and delivered. Defendant counterclaims for damages in the amount of $31,216.77 based on breach of contract. On January 26 and 27, 2009, a bench trial was held before me at which Paula Sorce, defendant's principal, Byung Chua ("John"), plaintiff's principal, and Rhea Castaneda, defendant's bookkeeper, testified. I permitted the parties to submit written closing arguments and post-trial memoranda on or before February 27, 2009. I find as follows:
Defendant ordered necklace and earrings sets from plaintiff. Pursuant to invoice number 020806-2, dated August 6, 2002, plaintiff charged defendant $5,452.80 for 3,840 sets (Def. Exh. C15), and pursuant to invoice number 020820, dated August 20, 2002, charged $13,088.40 for 20,136 sets. (Def. Exhs. C1-1, 19-2). Plaintiff was responsible for the shipping charges. Defendant sold the merchandise to Sears and never paid plaintiff nor returned any of it to plaintiff.
After plaintiff served and filed the instant action, defendant advised plaintiff, in facsimiles transmitted on September 29 and 30, 2004, that it was deducting $9,080 from the two [*2]invoices: $4,163 in labor costs incurred on three days for "fixing," $153 for meals for employees, and $4,764 for freight charges, leaving a balance due plaintiff of $9,461.20. (Pl. Exhs. 1-3).
This evidence demonstrates, prima facie, that defendant received and failed to pay for the merchandise it received from plaintiff in the amount of $18,541.20. That defendant denies liability for the full amount does not detract from plaintiff's prima facie case, nor does testimony of defendant's new bookkeeper that the facsimile transmissions were outdated.
Defendant moves for an order dismissing the complaint on the ground that plaintiff, which dissolved its New York corporate status the month before commencing this action, lacks capacity to sue defendant. Absent a legal basis, the motion is denied. (BCL § 1006[a][4] [dissolved corporation may sue or be sued]). Defendant also asserts that plaintiff's delay in commencing the instant action until it had dissolved its corporate status evidences its intent to thwart defendant's collection of any judgment to be rendered on its counterclaim. This assertion is too speculative to warrant relief; the mere circumstance does not prove the intent. Moreover, John testified that he retained the same corporate name when he moved to New Jersey, that the New Jersey corporate entity is a continuation of the New York entity, and that it has assets. The decisions relied on by defendant are significantly distinguishable. Consequently, the motion to dismiss on the ground of waiver or laches is denied.
In defense to this action, Sorce testified that the goods shipped by plaintiff were defective in that all of the packaging inserts were inappropriately marked in red (Def. Exh. A) and that most of the sets were bent or were missing stones (Def. Exh. B). Sorce took no photographs of any of the allegedly defective goods and retained no samples, offering only a single necklace and insert she happened to find in her store years later. (Def. Exhs. A, B). Although she maintained that she notified John immediately of the defects, she was unable to recall his reaction to her complaints, and offered no documentation evidencing her alleged purchase of replacement inserts. Her testimony that she paid employees and others to fix the goods is unsupported by any paid checks or receipts. Additionally, the testimony she gave at trial concerning the alleged defects materially differs from testimony she gave at her pre-trial deposition.
Given these circumstances, I do not credit Sorce's testimony that most of the more than 20,000 sets were defective. Moreover, any improper marking of the inserts, even if furnished by plaintiff, is too minor to constitute a compensable breach.
Even if I were to accept Sorce's testimony that the shipment was defective, John credibly testified that although Sorce registered a minor complaint, she never showed him the defects, and although he attempted to speak with Sorce by telephone about the balances due, he was never able to get her on the telephone and was denied access to her when he arrived at defendant's premises in person. Sorce thus gave him no opportunity to cure. Moreover, Sorce was not precluded from bringing defective samples to John if she wanted to notify him of same. John also denied that he provided packaging to defendant, and testified that he delivered the goods in plastic bags. Under the circumstances, I find that John's testimony is more credible than Sorce's. For these reasons, I find that plaintiff proved, by a preponderance of the credible evidence, its entitlement to damages in the amount of $18,541.20.
I now address defendant's counterclaim. According to Sorce, defendant's September 2004 records were incomplete, and upon further investigation conducted in 2008, she and Castaneda discovered that plaintiff owes defendant the freight charges defendant was forced to pay in order to receive the goods. In support, defendant offered copies of the freight forwarders receipts which are marked collect, arguing that its payment of the freight charges may be inferred therefrom. (Def. Exh. C2-9). Plaintiff opposes the admission in evidence of the receipts as inadmissible hearsay.
The common law business record exception to the hearsay rule is incorporated into CPLR 4518(a) which provides that a record is admissible in evidence where the proponent establishes that it was "made in the regular course of business," reflecting "a routine, regularly conducted business activity, needed and relied on in the performance of the functions of the business," that [*3]it was "the regular course of business to make the record pursuant to established procedures for the routine, habitual, systematic making of such a record," and that it was "made at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter, assuring that the recollection is fairly accurate and the entries routinely made." (People v Cratsley, 86 NY2d 81, 89 [1995]). In order to establish these elements, the proponent must call as a witness someone with knowledge of the record maker's business practices and procedures (Farrell, Richardson on Evidence § 8-305), and if the witness has no such familiarity with the particular record-keeping procedures of the business that created the record, the record is inadmissible.
In certain circumstances, someone from outside the business may be able to establish an evidentiary foundation, such as where an entity "routinely relies upon the business records of another entity in the performance of its own business," and "fully incorporates" information obtained from those records into its own record made in the regular course of its business. (Pine Hollow Med., P.C. v Progressive Cas. Ins. Co., 13 Misc 3d 131[A], 2006 NY Slip Op 51870[U] [App Term, 2d & 11th Jud Dists 2006]). In such circumstances, the "resulting record" is admissible despite the preparer's lack of personal knowledge of the accuracy of the information contained therein. (Id.).
While Castaneda and Sorce testified that defendant routinely relied on Sky Courier's receipts, defendant offered no evidence that the receipts were actually incorporated into its own business records and thus failed to establish a sufficient evidentiary foundation for the receipts. In any event, proof that the goods were shipped collect is no substitute for direct proof of payment absent an explanation for failing to produce the direct proof. Moreover, the copies offered in evidence are either illegible or contain handwritten notations and overlays which render them unreliable. Having thus failed in the first instance to prove by admissible evidence that the goods were sent collect, plaintiff's exhibit six and defendant's exhibit F need not be addressed.
Defendant also now claims that it is entitled to $11,472 in markdowns taken by Sears as a result of a subsidy agreement between it and Sears and offers in evidence two advices it received from Sears. (Def. Exhs. C10, 10-1, 6, 7). These advices also constitute inadmissible hearsay and, in any event, do not reflect that the markdowns were the result of the alleged defects. And if, as Sorce maintains, defendant repaired the merchandise, it is difficult to discern what portion of the alleged defects remained uncured. Consequently, there is an insufficient basis for determining the correct amount of the counterclaim.
Defendant also maintains that a summary of its records prepared by Castaneda (Def. Exh. C) should be admitted in evidence, not for its truth, but to illustrate Castaneda's "expert" testimony. As the summaries were concededly prepared for the purposes of litigation, they are inadmissible. (City of New York v State of New York, 27 AD3d 1, 8 [1st Dept 2005], lv denied 6 NY3d 711 [2006]). Moreover, most of the documentation on which the summaries is based is inadmissible. (Def. Exhs. C10-2, 3 [pertaining to different shipment, marked with self-serving notes], 10-5 [neither signed nor dated, self-serving], 10-8 [email complaint relating to packaging defect not claimed at trial], 11 [containing self-serving notes], 11-1 [incomprehensible], 11-2, 3 [purchase/cancel order for other provider], 12 [pertaining to different shipment and marked with self-serving notes], 12-1 [undated note from Sorce to employee], 13 [pertaining to different shipment, marked with self-serving notes], 13-1 [pertaining to different shipment, marked with self-serving notes], 13-2 [incomprehensible], 14 [duplicative of Def. Exh. 15, marked with self-serving notes], 14-1, 15-1 [no indication of who created them and when], 16 [incomprehensible], 16-1-3 [relating to lateness of shipment], 17 [incomprehensible], 19-1 [invoice with self-serving note], 19-2 [duplicative of C1-1], 20 [defendant's calculation of deductions for "outside help," purchases and materials, and presumably, meals for employees], 20-1 [incomprehensible], 22 [duplicative of Pl. Exh. 3, with self-serving notes], 22-1 [duplicative of Pl. Exh. 2], and 23 [duplicative of Pl. Exh. 1, with self-serving notes]).
The summaries themselves contain numerous assertions that are testimonial in nature. Thus, their allegedly illustrative function is negligible; they do not help me in interpreting [*4]Castaneda's testimony which was, moreover, not expert testimony insofar as defendant's defenses and counterclaim are concerned.
Accordingly, judgment is granted plaintiff in the amount of $18,541.20 with interest from August 29, 2002 and the counterclaim is dismissed. The clerk is directed to enter judgment accordingly.
This constitutes the decision and order of the court.
_______________________________
Barbara Jaffe, JCC
DATED:March 9, 2009
New York, New York
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