Hassn v Armouth Intl. Inc.

[*1] Hassn v Armouth Intl. Inc. 2022 NY Slip Op 50807(U) Decided on August 22, 2022 Supreme Court, New York County Lebovits, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 August 22, 2022
Supreme Court, New York County

Hossam Hassan Elanwar Saber Hassn, Plaintiff,

against

Armouth International Inc., Defendant.



INDEX NO. 650005/2020


Todd A. Gabor, Esq., Cedarhurst, NY, for plaintiff.

Jason R. Mischel, Esq., New York, NY, for defendant. Gerald Lebovits, J.

The following e-filed documents, listed by NYSCEF document number (Motion 004) 107, 108, 109, 110, 111, 112, 113, 114, 117, 118, 119, 120, 121, 122, 123, 124, 125, 126, 127, 128, 129, 130, 131, 132, 133 were read on this motion for LEAVE TO RENEW AND REARGUE.

This is a commercial contract action arising out of the sale of apparel by plaintiff (a clothing manufacturer) to defendant (a wholesaler). Plaintiff has sued to collect on approximately $342,000 of allegedly unpaid invoices. Defendant counterclaimed, alleging that defects in plaintiff's apparel caused defendant to suffer damages after defendant resold the apparel to its own customers (clothing retailers).

In a prior order, this court granted plaintiff's motion under CPLR 3126 to strike defendant's counterclaim for repeated failures to provide court-ordered discovery. (See Hassn v Armouth Intl. Inc., 2022 NY Slip Op 50038[U] [Sup Ct NY County Jan. 24, 2022].) Defendant now moves to reargue or renew this court's order on that motion. Plaintiff cross-moves for summary judgment in its favor on plaintiff's contract claim.

Defendant's motion is denied. Plaintiff's cross-motion is denied without prejudice.

DISCUSSION

I. Defendant's Motion to Renew or Reargue

In considering defendant's renewal/reargument motion, it is helpful to put the issues raised on that motion in context. Throughout this action, the parties have vigorously disputed the adequacy of the discovery that defendant has provided plaintiff relating to the counterclaim€"through an exchange of good-faith letters, in discovery conferences with the court, and ultimately through repeated motion practice.

In May 2021, this court held that although defendant's discovery productions to that point were insufficient, and indeed somewhat self-contradictory, plaintiff had not (yet) shown that it was entitled to its requested relief under CPLR 3126 of striking defendant's counterclaim. (See Hassn v Armouth Intl. Inc., 2021 NY Slip Op 50421[U], at *1-2 [Sup Ct, NY County May 14, 2021].) This court warned, though, that if defendant did not remedy the deficiencies in its productions relating to the counterclaim, the court was prepared to strike the counterclaim on plaintiff's request. (Id. at 3.)

Defendant later moved for leave to amend its counterclaim (supplying further documents to supplement its earlier productions), and to stay its discovery obligations pending consideration of the request for amendment. (See NYSCEF No. 71.) Plaintiff cross-moved to strike, contending that these supplemental documents did not remedy the existing defects in defendant's counterclaim-related discovery productions, and that striking the counterclaim was the proper remedy, rather than granting a stay. (See NYSCEF No. 86.)

This court agreed with plaintiff, entering an order in January 2022 that struck defendant's counterclaim. (See Hassn, 2022 NY Slip Op 50038[U].) This court explained that "a central question with respect to defendant's counterclaim is how much of plaintiff's clothing, and in which styles, was rejected as defective by which retailers, and returned or charged back to defendants as a result." (Id. at *3.) Defendant had consistently failed to provide documents relevant to this question that plaintiff had requested and that the court had ordered defendant to produce€"a defect that this court concluded was not remedied by defendant's limited supplemental production (or a related Jackson affidavit provided by its principal).[FN1] As a result, "defendant's repeated, ongoing, and extensive failure to produce documents supporting its counterclaim, notwithstanding multiple court orders to do so," warranted the drastic relief of striking the counterclaim. (Id. at *4.)

Defendant moves to renew and reargue this order. Defendant argues, in essence, that this court should reconsider the order because the order failed to take into account that one of defendant's retail customers, Zulily, had refused to produce documents subpoenaed by defendant that might relate to the business relationship between them (and thus to the subject of the counterclaim).[FN2] (See NYSCEF No. 108 at 5-12.) This court disagrees.

Granting leave to reargue is appropriate where the movant establishes that "the court overlooked or misapprehended the relevant facts, or misapplied any controlling principle of law." (Foley v Roche, 68 AD2d 558, 567 [1st Dept 1979].) Defendant has not shown that this court overlooked or misapprehended relevant facts. This court's January 2022 order expressly noted the existence of the Zulily subpoena but declined to take it into account because defendant had not "contacted the court about whether and to what extent it received relevant documents from Zulily in response to the subpoena." (Hassn, 2022 NY Slip Op 50038[U], at *4 n 6.) That defendant received Zulily's response to the subpoena in early September 2021 (see NYSCEF No. 108 at ¶ 6), but did not then inform the court of that response, is entirely consistent with€"rather than undermines€"the court's statement about the subpoena in the January 2022 order. The branch of defendant's motion seeking leave to reargue is denied.

Renewal is warranted where movant both submits "new facts not offered on the prior motion that would change the prior determination" and provides "reasonable justification for the failure to present such facts on the prior motion." (CPLR 2221 [e] [2]-[3].) Ordinarily, "new facts" must be "facts that existed but were unknown" to movant at the time of the prior motion. (Mehler v Jones, 181 AD3d 535, 535 [1st Dept 2020].) Supreme Court does, however, have discretion in appropriate circumstances "to grant renewal even upon facts known to the movant at the time." (J.D. Structures, Inc. v Waldbaum, 282 AD2d 434, 436 [2d Dept 2001].)

Here, defendant relies on facts (the Zulily subpoena response) that were not available at the time of briefing on the prior motion, but which became available to defendant approximately two weeks after the motion's return date€"months before this court issued an order resolving the motion. (See NYSCEF No. 108 at 4.) Defendant concedes that it did not contact the court to notify it of the subpoena response upon receipt, much less seek leave to file a supplemental submission addressing that response. Defendant's only explanation is that this court did not tell defendant it should update the court upon receiving a response. (See id. at ¶ 9.) That the court did not specifically instruct defendant to provide further information about the subpoena as it became available, though, is not a "reasonable justification" for defendant's choice, over an extended period of time, to refrain from doing so.

Regardless, defendant has not shown that the facts offered on its motion would change this court's determination in the January 2022 order. Defendant contends, in essence, that it is Zulily's (putative) recalcitrance that has prevented defendant from obtaining and providing sufficient documentary discovery to satisfy this court's May 2021 order and avoid the striking of its counterclaim. (See id. at 10-12.) This contention is unpersuasive.

As this court explained in the January 2022 order, defendant has failed to explain satisfactorily why the documents at issue cannot be produced from within defendant's own possession, custody, or control, without need to rely on Zulily. (See 2022 NY Slip Op 50038[U], at *3-4.) Nor is it clear what proportion of the damages alleged in defendant's counterclaim stem from rejections or returns of defective clothing by Zulily, as opposed to other retailers. As this court previously explained, "a central question with respect to defendant's counterclaim is how much of plaintiff's clothing, and in which styles, was rejected as defective by which retailers, and returned or charged back to defendants as a result. Defendant still has not provided documents that answer this basic question," even on the current motion. (Id. at *3 [emphasis added].)

At most, in briefing on its cross-motion to strike, plaintiff indicated that at least 7,000 cartons of apparel shipped by plaintiff to defendant remained unaccounted-for. (NYSCEF No. 98 at 4 [affidavit of plaintiff's principal].) In an affidavit on the current motion, defendant's principal states that defendant "never received over 2,000 boxes of the Damaged Apparel in question from Zulily." (NYSCEF No. 114 at ¶ 2.) It is unclear whether "boxes" in defendant's affidavit is equivalent to "cartons" in plaintiff's affidavit. Even if one assumes that the two are equivalent, and credits the statement in defendant's principal's affidavit, approximately 5,000 cartons of apparel€"something like 70% of the total goods at issue€"would remain unaccounted-for. This statement does not provide any information about whether and how much Zulily charged back to defendant prior to defendant's filing its counterclaim. For that matter, the statement raises (again) the question how defendant's principal could supply information about the number of boxes of plaintiff's clothing rejected by Zulily, but could not address the numerous other deficiencies in defendant's discovery productions.

In short, the mere fact that Zulily refused in the fall of 2021 to provide documents in [*2]response to defendant's broadly framed subpoena requests does not alter the conclusion in this court's January 2022 order that defendant's answer should be stricken for defendant' longstanding and persistent failure to provide court-ordered discovery. The branch of defendant's motion seeking renewal is denied.

Finally, defendant emphasizes in its reply papers that Zulily has since raised similar objections to a set of more narrow subpoena requests. (See NYSCEF No. 129 at 7 [mem. of law]; NYSCEF No. 131.) Defendant seeks an order compelling Zulily to respond to that subpoena. But defendant did not serve this new subpoena until mid-February 2022, weeks after this court struck defendant's answer. (See NYSCEF No. 108 at 11.) It is thus unclear how Zulily's response to the second subpoena should affect this court's consideration of defendant's motion. And given this court's conclusion that reargument and renewal are unwarranted, defendant's request to compel a response from Zulily is merely academic.

II. Plaintiff's Cross-Motion for Summary Judgment

Plaintiff cross-moves for summary judgment on its own claim for approximately $342,000 worth of invoiced but unpaid-for apparel. The cross-motion is denied without prejudice.

In support of its cross-motion, plaintiff submits seven invoices for apparel supplied by plaintiff to defendant, with corresponding bills of exchange and bills of lading, totaling that sum. (See NYSCEF Nos. 124-126.) That submission establishes prima facie that plaintiff is entitled to summary judgment. In opposition, however, defendant points to a number of emails exchanged between the parties during the time period at issue, in which defendant's principal repeatedly indicates that he was deferring or withholding payment for clothing shipments from plaintiff because those shipments were incomplete. (See NYSCEF No. 129 at 9-11.)

These emails, if they apply to the seven invoices at issue in this action, would if credited raise a fact question about whether plaintiff had fully performed and was entitled to payment. Plaintiff contends on reply, though, that these "email[s] have NOTHING to do with the seven outstanding invoices," and that a "more thorough reading of the entire email exchange," included as part of the document production found at NYSCEF No. 58, shows instead that the "parties are arguing about purchase orders that were not completed because [defendant] refused to pay for the seven subject invoices." (NYSCEF No. 132 at 4.) On this record, this court finds plaintiff's argument unpersuasive.[FN3]

It is clear from the record that during the period at issue (the summer and fall of 2019), the parties were engaged in a series of overlapping international transactions arising out of an ongoing commercial relationship. The voluminous emails between them, often phrased in [*3]business shorthand and assuming a background knowledge of the parties' business dealings, are correspondingly challenging to interpret. On reviewing NYSCEF No. 58, this court remains unsure about which shipments the emails relied on by defendant did, or did not, pertain to€"and thus whether plaintiff is correct that those emails concerned solely shipments from plaintiff to defendant other than the seven on which plaintiff now sues for payment.

For clarity, this court is not at this time deciding the question one way or the other. Plaintiff's characterization of the email exchanges may yet prove to be accurate. But on the current motion, plaintiff's papers do not establish as a matter of law that it fully delivered, but was not paid for, the goods covered by the seven invoices on which plaintiff relies. In these circumstances, this court concludes that plaintiff should have another opportunity to try to explain the nature of the transactions between the parties, and thereby show that the emails on which defendant relies do not raise factual disputes relating to plaintiff's claims to payment in this action.

Accordingly, it is

ORDERED that defendant's motion to reargue or renew is denied; and it is further

ORDERED that plaintiff's cross-motion for summary judgment is denied without prejudice.

Dated: August 22, 2022
Hon. Gerald Lebovits
J.S.C. Footnotes

Footnote 1:See Jackson v City of New York, 185 AD2d 768 [1st Dept 1992]).

Footnote 2:Zulily instead served a series of objections to defendant's subpoena requests. (NYSCEF No. 111 [subpoena response].)

Footnote 3:Plaintiff also contends, in effect, that these emails are irrelevant because, in striking defendant's counterclaim, this court "essentially ruled that there are no credits, setoff[s] or claims which would discount [plaintiff's] claim." (NYSCEF No. 133 at 2-3.) This court's contention overstates the scope of the court's January 2022 order striking the counterclaim. That counterclaim, and thus the scope of this court's order, was based on defendant's allegations of harm due to defective goods shipped by plaintiff. As this court understands it, defendant's current argument is that plaintiff is not entitled to full payment on the invoices because the invoiced shipments were incomplete, as opposed to complete-but-defective. That argument (and the emails defendant proffers to support the argument) is not foreclosed by this court's January 2022 order.