business of manufacturing sweaters and other knitted garments.
In or about September 1984, Norton Davis ("Davis"), president
of VKC, contacted Dubied regarding the possible purchase of
knitting machinery by VKC. Two days after that conversation,
Davis and his wife met with Robert Schneider, the president of
Dubied. During this meeting, Schneider showed Davis and his
wife four knitting mills in the New York City area that used
Dubied knitting equipment. About a month after the tour of the
mills, VKC ordered two Jet-3 knitting machines (the "Jet-3
machines") and one Jet-3F knitting machine from Dubied, as well
as a computer and software to run the knitting machines.
See Affidavit of Martin R. Lee, Esq., sworn to on March 15,
1990, Exh. 1.
Two of the Jet-3 machines were delivered to VKC in late May,
1985, some months after their original order date. The computer
and software were delivered in August 1985. Plaintiff's
Statement of Undisputed Facts, ¶ 7. While VKC was awaiting
delivery of the Jet-3 machines, Dubied loaned a used Jet-2
knitting machine (the "Jet-2 machine") to VKC to allow VKC to
continue production while it awaited the Jet-3 machines. It
appears that the Jet-3F knitting machine was never
delivered.*fn1 Also, from April to September 1985, Dubied
supplied VKC with goods and services related to the operation
and maintenance of knitting equipment. None of the equipment or
services have been paid for, except for nominal downpayments.
Defendant asserts that none of the Dubied equipment it
received ever worked properly, and thus prevented defendant
from operating its business in an efficient fashion. In
particular, defendants claim that the Jet-3 machines were
improperly installed, required constant maintenance and failed
to operate consistently. Defendant further asserts that the
Jet-2 machine was in poor condition when delivered and required
substantial modification before it became useful to the
The instant action was filed on October 31, 1985. In late
November 1987, defendant filed for protection under Chapter 11
of the Bankruptcy Code, 11 U.S.C. § 101 et seq. The bankruptcy
litigation has been converted to a liquidation under Chapter 7
of the Bankruptcy Code, and remains pending in the District of
Vermont. The bankruptcy court issued an order granting relief
to the present parties from an automatic stay of litigation so
that they might pursue their claims and counterclaims in this
Court. By order dated February 21, 1989, this Court denied
defendant's motion to transfer this action to the United States
District Court for the District of Vermont. Subsequently,
plaintiff filed the instant motion.*fn2
Plaintiff has moved for judgment on the pleadings, or, in the
alternative, for summary judgment. A motion for judgment on the
pleadings under Fed.R.Civ.P. 12(c) must be decided solely on
the pleadings before the Court, plus any materials implicitly
or explicitly incorporated by reference into those pleadings.
See Goldman v. Belden, 754 F.2d 1059, 1065-66 (2d Cir. 1985). A
party is entitled to judgment on the pleadings under Rule 12(c)
"only if it has established `that no material issue of fact
remains to be resolved and that [it] is entitled to judgment as
a matter of law.'" Juster Associates v. Rutland, 901 F.2d 266,
269 (2d Cir. 1990), quoting 5 C. Wright & A. Miller, Federal
Practice and Procedure, § 1368, at 690 (1969). Where the Court
is confronted with matters outside of
the pleadings that it wishes to consider, it should treat the
motion as one for summary judgment pursuant to Fed.R.Civ.P. 56.
See Krijn v. Pogue Simone Real Estate Co., 896 F.2d 687, 689
(2d Cir. 1990); National Association of Pharmaceutical Mfrs.,
Inc. v. Ayerst Laboratories, 850 F.2d 904, 911 (2d Cir. 1988).
Fed.R.Civ.P. 12(c) requires that when a court decided to
treat a motion to dismiss as one for summary judgment, "all
parties shall be given reasonable opportunity to present all
materials made pertinent to such motion by Rule 56." Rule
12(c). See Ayerst, supra; Villante v. Department of
Corrections, 786 F.2d 516, 521 (2d Cir. 1986). In the instant
case, defendant was on notice that the Court might choose to
consider the instant motion as one for summary judgment, as
plaintiff framed its motion as one for both judgment on the
pleadings and for summary judgment. Further, the material
submitted by defendant's current counsel was of the type
relevant only to a motion for summary judgment. Given the
volume and relevance of the non-pleading material submitted in
conjunction with this motion, the Court chooses to consider the
instant motion as one for summary judgment.
Rule 56(c) provides that summary judgment "shall be rendered
forthwith if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to
judgment as a matter of law." "`Summary judgment is appropriate
when, after drawing all reasonable inferences in favor of the
party against whom summary judgment is sought, no reasonable
trier of fact could find in favor of the non-moving party.'"
Horn & Hardart Co. v. Pillsbury Co., 888 F.2d 8, 10 (2d Cir.
1989), (quoting Murray v. National Broadcasting Co.,
844 F.2d 988, 993 (2d Cir.), cert. denied, 488 U.S. 955, 109 S.Ct. 391,
102 L.Ed.2d 380 (1988)).
The substantive law governing the case will identify those
facts which are material, and "[o]nly disputes over facts that
might affect the outcome of the suit under the governing law
will properly preclude the entry of summary judgment. . . .
While the materiality determination rests on the substantive
law, it is the substantive law's identification of which facts
are crucial and which facts are irrelevant that governs."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct.
2505, 2510, 91 L.Ed.2d 202 (1986). "[T]he judge's function is
not himself to weigh the evidence and determine the truth of
the matter but to determine whether there does indeed exist a
genuine issue for trial." Id. at 249, 106 S.Ct. at 2511; see
also R.C. Bigelow, Inc. v. Unilever N. V., 867 F.2d 102, 107
(2d Cir.), cert. denied sub nom. Thomas J. Lipton, Inc. v. R.
C. Bigelow, Inc., ___ U.S. ___, 110 S.Ct. 64, 107 L.Ed.2d 31
(1989). The party seeking summary judgment "always bears the
initial responsibility of informing the district court of the
basis for its motion" and identifying which materials it
believes "demonstrates the absence of a genuine issue of
material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323,
106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986); see also Trebor
Sportswear Co. v. Limited Stores, Inc., 865 F.2d 506, 511 (2d
Cir. 1989). "[T]he burden on the moving party may be discharged
by `showing' — that is, pointing out to the district court
— that there is an absence of evidence to support the
nonmoving party's case." Celotex, supra, 477 U.S. at 325, 106
S.Ct. at 2554.
Indeed, once a motion for summary judgment is properly made,
the burden then shifts to the nonmoving party, which "must set
forth facts showing that there is a genuine issue for trial."
Anderson, supra, 477 U.S. at 250, 106 S.Ct. at 2511. The
nonmoving party "must do more than simply show that there is
some metaphysical doubt as to the material facts." Matsushita
Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586,
106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (citations
A) Goods Sold and Delivered
The Court is faced with a complex civil procedure problem by
in response to plaintiff's claims, and by defendant's less than
thorough response to the instant motion. Defendant has filed,
and plaintiff has answered, extensive counterclaims alleging,
inter alia, breach of warranty and fraudulent misrepresentation
on the part of plaintiff in relation to the Jet-3 machines.
Defendant has failed to plead explicitly any affirmative
defenses to plaintiff's claims. Fed.R.Civ.P. 8(c) requires that
affirmative defenses be pled in the answer to the complaint, or
they are deemed waived. See Fed.R.Civ.P. 8(c); United States on
behalf of Maritime Admin. v. Continental Illinois Nat'l Bank &
Trust Co., 889 F.2d 1248, 1253 (2d Cir. 1989); Wade v. Orange
County Sheriff's Office, 844 F.2d 951, 955 (2d Cir. 1988).
However, in the spirit of the liberal pleading requirements
of the Federal Rules of Civil Procedure, Rule 8(c) states,
"[w]hen a party has mistakenly designated a defense as a
counterclaim or a counterclaim as a defense, the Court on
terms, if justice so requires, shall treat the pleading as if
there had been a proper designation." The purpose of this
portion of the Rule "is to allow a court to ignore improper
designations in order to interpret a pleading in accordance
with its true character." Bozsi Limited Partnership v. Lynott,
676 F. Supp. 505, 516 (S.D.N.Y. 1987). See also Morris v. Homco
International, Inc., 853 F.2d 337, 342 (5th Cir. 1988) ("The
purpose of Rule 8(c) . . . is to inform the court and the
parties how the case will be tried."). "The misdesignation
provision in Rule 8(c) reflects the conscious attempt by the
draftsmen to ignore pleading technicalities; it also promotes
the liberality with which courts generally construe pleadings
under the federal rules." 5 C. Wright & A. Miller, Federal
Practice and Procedure, § 1275 at 326 (1969).
In the instant case, defendant's counterclaims include
allegations that could be pled as affirmative defenses or as
counterclaims. In particular, defendant's allegations of
fraudulent misrepresentation and breach of warranty could act
as affirmative defenses to plaintiff's contract claims for
goods sold and delivered. Indeed, defendant in its papers in
opposition to plaintiff's instant motion have indicated that
its counterclaims should also be read as affirmative defenses.
See Defendant's Memorandum of Law at 2. The Court finds that,
pursuant to Rule 8(c), such a reading of defendant's
counterclaims is appropriate. Plaintiff has been on notice
since the filing of the original answer and counterclaims of
defendant's allegations. It is just such a provision of notice
that is the goal of Rule 8(c). Where a plaintiff has been made
aware of the defendant's theory of the case, as plaintiff was
here, it would be counter to the language and spirit of Rule
8(c) to fail to recognize an affirmative defense simply because
it was labeled solely as a counterclaim.*fn3
In light of the defenses to plaintiff's contract claims for
goods sold and delivered pled in the form of a counterclaim,
the Court finds that there are genuine issues of material fact
going to the merits of plaintiff's claims. In particular, there
is evidence, in the form of the affidavit of Norton Davis that
officials of Dubied made false representations regarding the
performance of the Jet-3 machines. Affidavit of Norton Davis,
sworn to on November 29, 1989 ("Davis Aff."), ¶¶ 5, 18.
Further, there are factual issues regarding the performance of
the Jet-3 machines actually delivered to VKC. Davis Aff., ¶ 19,
Plaintiff urges the Court to enter summary judgment on its
contract claims on the basis that the goods were delivered and
accepted, and that evidence of the delivery and of an
agreed-upon price has been placed before the Court. Plaintiff
correctly points out that defendant has not challenged
plaintiff's assertions of delivery, acceptance and price.
Plaintiff cites a number of cases for the proposition that
where a party has shown that goods were actually sold and
delivered, summary judgment
should be granted for that party, even in the face of a claim
for set-off by the opposing party. See Delta Tanning Corp. v.
Samber Leather Fashions, Ltd., 654 F. Supp. 1285 (S.D.N Y
1987); T.S.I. 27, Inc. v. Berman Enterprises, Inc., 115 F.R.D.
252 (S.D.N.Y. 1987); Electro-Catheter Corp. v. Surgical
Specialties Instrument Co., 587 F. Supp. 1446 (D.N.J. 1984).
However, in none of the cases cited was the Court faced with an
affirmative defense going to the viability of the contract
relationship or to the satisfactory nature of the goods. Thus
these cases are not controlling in the instant motion. The
Court finds that there are genuine issues of material fact as
to the first, third and sixth causes of action.
Plaintiff's ninth cause of action is for replevin*fn4 of the
Jet-2 machine which was lent to VKC and has never been
returned.*fn5 To establish a cause of action under CPLR
Article 71, plaintiff "must show that [it] has an immediate and
superior right to possession of the [goods]." De Weerth v.
Baldinger, 658 F. Supp. 688 (S.D.N.Y.), rev'd on other grounds,
836 F.2d 103 (2d Cir. 1987), cert. denied, 486 U.S. 1056, 108
S.Ct. 2823, 100 L.Ed.2d 924 (1988). Indeed, in a replevin
action, "`the issue is strictly whether plaintiff or defendant
has the superior possessory right.'" Wurdeman v. Miller,
633 F. Supp. 20, 22 (S.D.N.Y. 1986), citing Honeywell Information
Systems, Inc. v. Demographic Systems, Inc., 396 F. Supp. 273,
275 (S.D.N.Y. 1975).
In the instant case, the Jet-2 machine was indisputably
loaned to VKC solely for the purpose of providing VKC some
manufacturing capacity while awaiting the late delivery of the
Jet-3 machines. Title in the Jet-2 machine has remained in
Dubied during the entire time the machine has been in the
possession of VKC. Indeed, VKC does not claim any title or
right to the Jet-2 machine, except as security for satisfaction
of its counterclaims against Dubied.*fn6 VKC's would certainly
have a valid security interest in the Jet-2 machine if one or
more of its counterclaims related to that machine. However, all
of the counterclaims relate solely to the Jet-3 machines. The
Jet-2 machine is never mentioned in the counterclaims.
"[T]here are defenses which, if asserted in good faith, will
defeat an application [for replevin] pending trial."
Scutti Pontiac, Inc. v. Rund, 92 Misc.2d 881, 884, 402 N.Y.S.2d
144, 147 (Sup.Ct. 1978). Indeed, a defendant in a replevin
action is "entitled to present any good faith defense . . .
that it has a superior possessory right to the [goods at
issue]." F. & M. Schaefer Corp. v. Electronic Data Systems
Corp., 430 F. Supp. 988 (S.D.N.Y. 1977), aff'd without opinion,
614 F.2d 1286 (2d Cir. 1979). However, "the mere assertion of a
defense or counterclaim will not defeat the right to an order
of seizure." Scutti Pontiac, supra, 402 N.Y.S.2d at 147. While
there is a paucity of caselaw on what defenses are effective
against replevin action, "[a] claim of fraud in the inducement
can in some circumstances defeat a replevin motion." General
Motors Acceptance Corp. v. Berg and Duffy, 118 Misc.2d 525,
527, 460 N.Y.S.2d 899, 901 (Sup.Ct. Nassau Co. 1983).
However, VKC's only defenses and counterclaims in this action
relate to the Jet-3 machines, not to the Jet-2 machine. While
those counterclaims might act as a defense to a replevin action
against the Jet-3 machines delivered to VKC, they cannot act as
a defense to the action related to the Jet-2 machines. The
question raised by defendant's counterclaims do not affect its
obligation to return the Jet-2 machine. A party cannot simply
seize another's property and defend against an action to
recover that property on the grounds that it is security for
other claims that party has against the owner. Cf. Centurion
Reinsurance Co. v. Singer, 810 F.2d 140, 145 (7th Cir. 1987).
Even if VKC had pled in its counterclaims that the Jet-2
machine failed to perform properly, it would not be a
sufficient defense to the instant replevin action. "[E]ven
taking defendants' allegations of poor equipment performance as
true, defendant fails to state a valid defense to a replevin
action where, as here, performance was not a condition [on the
loan of the Jet-2 machine]." Honeywell Information Systems,
Inc. v. Demographic Systems, Inc., 396 F. Supp. 273, 275
(S.D.N.Y. 1975). Defendant's alleged security interest in the
Jet-2 machine due to its counterclaims regarding the Jet-3
machines is not sufficient to defeat plaintiff's replevin
action. Accordingly, plaintiff's motion for summary judgment on
its ninth cause of action is granted.
It is not clear from plaintiff's pleading under what section
of CPLR Article 71 plaintiff is proceeding in its effort to
regain possession of the Jet-2 machine. CPLR 7101 provides a
remedy for determining right to possession, but does not
automatically provide for seizure of the at issue. See
McLaughlin, Practice Commentaries, McKinney's Cons. Laws of
N Y, Book 7B, CPLR C7101:1 et seq. An explicit action for
seizure must be brought to obtain an order requiring that the
sheriff seize the goods in question. In the instant case,
plaintiff has requested only that the Court adjudge it as the
owner of the Jet-2 machine and entitled to immediate possession
thereof, and that Dubied either be allowed to take possession
of the machine or have it delivered to it. If delivery is not
possible, plaintiff demands that the value of the machine be
awarded as damages. Second Amended Complaint, ¶ 62I.
Plaintiff's request for recovery is within the scope of Article
71. The Court finds that plaintiff is the owner of the Jet-2,
and is entitled to possessio thereof.
Plaintiff's motion for summary judgment on the first, third,
and sixth causes of action is denied. Plaintiff's motion for
summary judgment on the ninth cause of action is granted.
Plaintiff shall contact the Court within twenty (20) days of
this order to set a time convenient to the parties and the
Court for a pre-trial conference in this matter.