The opinion of the court was delivered by: Curtin, District Judge.
There are two disputes at issue in this case. Plaintiff
Cliffstar Corporation ("Cliffstar") has moved for summary
judgment on its claimed loss from partial delivery of an order
of 3.2 million pounds of tomato paste. Defendant Riverbend
Products, Inc. ("Riverbend") has cross-moved for summary
judgment for payment on its delivery to Cliffstar of ten
boxcars of lemon concentrate and also for payment on the tomato
paste it actually delivered to Cliffstar.
Riverbend processes and sells tomato paste and frozen citrus
products. It has processing plants in Visalia, California and
Yuma, Arizona. Item 28, at 1.
On July 14, 1988, Cliffstar ordered 3.2 million pounds of
tomato paste from Riverbend. Item 1, Ex. A (Purchase Order No.
100011). In the same order, Cliffstar attempted to purchase an
option on an additional 500,000 pounds of paste. Delivery of
the paste was to be spread over the following year, until June
30, 1989. Riverbend accepted the order in writing on July 25,
1988. Item 1, Ex. B. Dale Seal, Riverbend's Director of Sales,
rejected Cliffstar's requested option, however, writing: "at
this time I am unable to give any options for any additional
quantities due to the uncertainty of the incoming tonnage. I
will keep you advised as the season progresses." Id.
Between October and December 1987, Riverbend had forecast
sales for the 1988 tomato crop of approximately 53 million
pounds of tomato paste. Item 32, at 4. In January and February
of 1988, Riverbend's field department contracted with growers
in Arizona and California to supply 170,000 tons of raw
tomatoes. Id. at 5. The field department also projected
purchasing additional tons of raw tomatoes on the spot market.
Id. at 5-6. By combining firm contracts with spot buys,
Riverbend planned to acquire sufficient numbers of raw tomatoes
to support its sales forecast. Thereafter, Riverbend received
oral and written orders for approximately 78 million pounds of
tomato paste. Id. at 6. It remains disputed, however, whether
Riverbend accepted these orders, and thus entered into
contracts to supply this amount. Compare id. at 6 (citing Seal
EBT at 24-26, Seal affidavit ¶ 10) with Item 28, at 2 (citing
Seal EBT). See also Item 38, at 5-10 (arguing at length that
Seal EBT and affidavit are not in contradiction).
About the time the Cliffstar-Riverbend contract was formed,
and into the early fall, a shortage developed in the tomato
crop in Arizona and California. Weather conditions in Arizona
caused the crop, normally harvested over an eight to nine week
stretch in June and July, to "bunch" (i.e., ripen at the same
time), and thus last only five to six weeks from June 1 until
mid-July. Item 32, at 7. The California crop experienced
similar bunching, causing an accelerated harvest concluding in
late September. Id. When the harvest is accelerated
in this fashion, processors cannot process all of the crop as
it becomes ready and growers are forced to plow under some of
the crop, thus creating a shortage.
The combined 1988 Arizona and California tomato harvest was
about 8.45%, less than early season estimates. However,
Riverbend's contract growers delivered only 95-100,000 tons of
the 170,000 tons of tomatoes Riverbend had contracted for, or
about 56-58%. Item 32, at 6. Shortages developed in other parts
of the country as well. See Item 34, Ex. RB-28. Riverbend
became aware of the Arizona shortage by August 1, 1988, and of
the California shortage in September, 1988, when its processing
plants had completed canning the shortened supply.
Based on the shortages it was experiencing, Riverbend failed
to deliver the 3.2 million pounds of paste. Instead, Riverbend
chose to allocate its available supply among its customers.
Riverbend first notified Cliffstar by letter of September 27,
1988, that all contracts would have to be reevaluated. Item 34,
Ex. RB-5.*fn1 Riverbend notified Cliffstar by letter of
November 21, 1988, that Cliffstar would be allocated one
million pounds of paste. Item 34, Ex. RB-7. Riverbend did not
allocate to each of its customers an equal percentage of their
Between November 21, 1988, and January 23, 1989, Riverbend
and Cliffstar engaged in oral and written
settlement-modification negotiations. The parties dispute
whether Cliffstar agreed to an allocation, or otherwise
modified the initial contract with Riverbend. In any event,
Riverbend delivered substantially less than one million pounds
of paste to Cliffstar. Cliffstar demanded its full contract
amount and this lawsuit ensued.
II. LEMON CONCENTRATE CONTRACT
There are no disputed facts here. In July, 1988, Cliffstar
ordered 127,817.89 pounds of lemon concentrate from Riverbend.
The concentrate was delivered on December 29, 1988, and January
4, 1989. The total price of the concentrate was $249,244.88.
Cliffstar essentially admits these facts. See Item 7. It
merely asserts in defense that it is entitled to offset the
cost of these shipments against its claim for non-delivery of
the tomato paste either under N.Y.U.C.C. Law § 2-717 (McKinney
1964) or under state law.
I. PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT ON THE TOMATO PASTE
Plaintiff Cliffstar has moved for summary judgment. In order
to prevail on its motion, Cliffstar must show "that there is no
genuine issue as to any material fact and that [it] is entitled
to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A
material fact is one "that might affect the outcome of the suit
under the governing law. . . ." Anderson v. Liberty Lobby,
477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A
dispute is genuine "if the evidence is such that a reasonable
jury could return a verdict for the nonmoving party." Id. The
court "must resolve all ambiguities and draw all reasonable
inferences in favor of the party defending against the motion."
Eastway Constr. Corp. v. City of New York, 762 F.2d 243, 249
(2d Cir. 1985), cert. denied, 484 U.S. 918, 108 S.Ct. 269, 98
L.Ed.2d 226 (1987). "Uncertainty as to the true state of any
material fact defeats the motion." United States v. One
691 F.2d 603, 606 (2d Cir. 1982) (citation omitted).
Plaintiff bases its cause of action on the fact that (1) it
ordered 3.2 million pounds of tomato paste on July 14, 1988 for
delivery over the next year, (2) this order was accepted by
defendant on July 25, 1988, and (3) the tomato paste was not
forthcoming. Riverbend defends under N.Y.U.C.C. Law § 2-615
(McKinney 1964), which provides:
Except so far as a seller may have assumed a
greater obligation and subject to the preceding
section on substituted performance:
(a) Delay in delivery or non-delivery in whole or
in part by a seller who complies with paragraphs
(b) and (c) is not a breach of his duty under a
contract for sale if performance as agreed has
been made impracticable by the occurrence of a
contingency the non-occurrence of which was a
basic assumption on which the contract was made..
(b) Where the causes mentioned in paragraph (a)
affect only a part of the seller's capacity to
perform, he must allocate production and
deliveries among his customers but may at his
option include regular customers not then under
contract as well as his own requirements for