United States District Court, Western District of New York
November 15, 1990
CLIFFSTAR CORPORATION, PLAINTIFF,
RIVERBEND PRODUCTS, INC., DEFENDANT.
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.
I. TOMATO PASTE CONTRACT
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).
A. N.Y.U.C.C. § 2-615
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
further manufacture. He may so allocate in any
manner which is fair and reasonable.
(c) The seller must notify the buyer
seasonably that there will be delay or
non-delivery and, when allocation is required
under paragraph (b), of the estimated quota thus
made available for the buyer.
(emphasis added). Summary judgment largely hinges on whether
defendant has complied with this section.
To prevail under this defense, Riverbend must establish that:
"(1) a contingency has occurred; (2) the contingency has made
performance impracticable; and (3) the nonoccurrence of that
contingency was a basic assumption upon which the contract was
made." Waldinger Corp. v. CRS Group Eng'rs, Inc., 775 F.2d 781,
786 (7th Cir. 1985). See also Louisiana Power & Light Co. v.
Allegheny Ludlum Indus., 517 F. Supp. 1319, 1323 (E.D.La. 1981).
In addition, Riverbend must show that its allocation to
Cliffstar was "fair and reasonable," N.Y.U.C.C. § 2-615(b), and
that it "seasonably" notified Cliffstar of its need to allocate
and the amount Cliffstar was to receive under this allocation.
N YU.C.C. § 2-615(c). Riverbend also has the burden of proof
on each element of this defense. Louisiana Power, 517 F. Supp.
at 1324; Eastern Air Lines v. Gulf Oil Corp., 415 F. Supp. 429,
438 (S.D.Fla. 1975).
1. Was the 1988 Tomato Crop Shortage Foreseeable?
Under § 2-615, the first question is whether the 1988 tomato
crop shortage was "a contingency the non-occurrence of which
was a basic assumption on which the contract was made."
N YU.C.C. § 2-615(a). This question, in turn, hinges on
whether the crop shortage was foreseeable at the time the
contract was made. See Waldinger Corp., 775 F.2d at 786. "If a
contingency is foreseeable, it and its consequences are taken
outside the scope of U.C.C. § 2-615, because the party
disadvantaged by fruition of the contingency might have
protected himself in his contract." Eastern Air Lines, 415
F. Supp. at 441. See also Waldinger Corp., 775 F.2d at 786-87; 4
R. Anderson, UNIFORM COMMERCIAL CODE § 2-615:16 (1983 and Supp.
1989). However, non-foreseeability is not an absolute
requirement. "After all, as Williston has said, practically any
occurrence can be foreseen but whether the foreseeability is
sufficient to render unacceptable the defense of impossibility
is `one of degree'. . . ." Opera Co. of Boston v. Wolf Trap
Foundation for the Performing Arts, 817 F.2d 1094, 1101-02 (4th
Cir. 1987). See also Transatlantic Fin. Corp. v. United States,
363 F.2d 312, 318 (D.C. Cir. 1966).
Plaintiff argues that Mr. Seal at Riverbend was aware of the
bunching of the 1988 Arizona tomato crop as early as June 1,
1988, or in any event no later than mid-July
when it had been fully harvested. Plaintiff further argues that
Mr. Seal knew of the shortfall in the California crop at the
end of July, 1988. Plaintiff also points out that, in his
letter accepting Cliffstar's 3.2 million pound order, Mr. Seal
advised Cliffstar that "the uncertainty of the incoming crop"
prevented him from giving Cliffstar an option for additional
tomato paste. Item 1, Ex. B. Thus, plaintiff claims, Riverbend
could have foreseen the crop shortage by July 25, 1988, when it
confirmed Cliffstar's order. Riverbend's failure to protect
itself against this contingency bars application of § 2-615,
Defendant admits that on July 25, 1988, the Arizona harvest
had just concluded, but argues Mr. Seal was not aware that
Riverbend's Arizona processing plant had processed only 50% of
its expected tonnage until August 1, 1988. Riverbend also notes
that the much larger California harvest did not conclude until
mid-to-late September. Until that time, Riverbend remained
hopeful that the California harvest would make up the shortfall
caused by the bunching in the Arizona crop. See Item 34, Ex. A
at 129-30 (Seal EBT). Indeed, the Food Institute Report ("FIR")
had increased its estimate of California production from 6.9
million tons on March 26, 1988 to 7.1 million tons by July 16,
1988, and held to this production estimate as late as September
10, 1988. See Item 34, Ex. RB-31. It was not until its issue of
September 17, 1988, that the FIR noted that "[h]ot temperatures
in California have reduced crop prospects in that state." Id.
Under these facts, the court finds that there is a genuine
issue of material fact as to whether the crop shortage was
foreseeable at the time the contract was made. See Alimenta
(U.S.A.), Inc. v. Cargill, Inc., 861 F.2d 650, 653-54 (11th
Cir. 1988) (holding foreseeability of peanut crop shortage to
be jury question).
2. Was Riverbends Failure to Perform Caused by the
Shortage in the 1988 Tomato Crop?
Plaintiff's second argument is that Riverbend's failure to
deliver the tomato paste was not caused by the 1988 crop
shortfall but by oversale of its contracted-for supply. "To
successfully assert the affirmative defense of commercial
impracticability, the party must show that the unforeseen event
upon which excuse is predicated is due to factors beyond the
party's control." Roth Steel Products v. Sharon Steel Corp.,
705 F.2d 134, 149-50 (6th Cir. 1983). Defendant may not have
caused the event that prevents performance. National Iranian
Oil Co. v. Ashland Oil Co., 817 F.2d 326, 333 (5th Cir. 1987);
Nissho-Iwai Co. v. Occidental Crude Sales, Inc., 729 F.2d 1530,
1540 (5th Cir. 1984). In Roth Steel, the court barred an
impracticability defense where the "record indicate[d] that
Sharon continued to accept an unprecedented amount of purchase
orders during the first half of 1973 even though it knew that
raw materials were in short supply." Roth Steel, 705 F.2d at
Both parties agree that by early 1988, Riverbend had
projected sales of approximately 53 million pounds of tomato
paste. Riverbend then contracted with local growers in Arizona
and California to receive 170,000 tons of raw tomatoes.
Riverbend also planned to purchase an additional 30,000 tons of
raw tomatoes on the spot market. Thereafter, Riverbend received
orders for approximately 78 million pounds of paste. These
facts are not disputed.
The dispute between the parties centers on the validity of
Mr. Seal's assertion in his May 31, 1990 affidavit that
"although I received orders for approximately 78 million pounds
of tomato paste, I did not enter into contracts to sell that
amount." Item 34, ¶ 24. Defendant devotes five pages of its
brief arguing that this assertion does not contradict Mr.
Seal's deposition testimony.*fn2 Item 38, at 5-10. Defendant
first that Item 34, Ex. RB-46, contains only a list of
purchase orders, not contracts, for 1988 tomato paste received
by Riverbend. Defendant further argues that Mr. Seal, a
layperson, meant "orders" when he said "contract" during his
Further, many of the orders [we]re standing orders
from year to year pursuant to which various buyers
request[ed] Riverbend to ship as much tomato
product as possible up to a certain maximum
quantity, and then during the year that figure
[would be] adjusted by both parties depending upon
price and availability of product.
Item 34, ¶ 24 (Seal affidavit).
Plaintiff argues that Mr. Seal's testimony, and the purchase
orders attached as Ex. RB-46 speak for themselves. Plaintiff
further argues that Mr. Seal should not be able to raise an
issue of fact merely by contradicting his prior testimony.
See Perma Research and Development Co. v. Singer Co.,
410 F.2d 572, 578 (2d Cir. 1969); United States
v. Dercacz, 530 F. Supp. 1348,
1351 (E.D.N.Y. 1982); Miller v. Int'l Tel. and Tel. Co.,
755 F.2d 20, 24 (2d Cir.), cert. denied, 474 U.S. 851, 106
S.Ct. 148, 88 L.Ed.2d 122 (1985); 10A C. Wright, A. Miller & M.
Kane, FEDERAL PRACTICE AND PROCEDURE § 2726 (1983 & Supp.
1990). In Perma Research, the court stated:
If a party who has been examined at length on
deposition could raise an issue of fact simply by
submitting an affidavit contradicting his own
prior testimony, this would greatly diminish the
utility of summary judgment for screening out sham
issues of fact.
Perma Research, 410 F.2d at 578. "On the other hand, if the
witness' answers in the deposition are not that clear or the
questions are not that unambiguous, a later filed affidavit may
indeed create a genuine issue by supplying additional facts."
FEDERAL PRACTICE AND PROCEDURE § 2726 (Supp. 1990) (citing
three cases); Dercacz, 530 F. Supp. at 1351 ("Defendant failed
to submit any supporting facts which suggest that the former
testimony should be discredited; therefore, the Court credits
defendant's prior unambiguous statements.") (emphasis added).
After thorough examination, the court concludes that Mr.
Seal's testimony and the attached documents are not without
some ambiguity. Moreover, the question to be decided is whether
Riverbend's shortages were the result of factors outside its
control. It must be noted that, according to Item 34, Ex.
RB-37, Riverbend was only able to deliver 41,924,097 pounds of
1988 tomato paste through May 1, 1989. Yet Riverbend had
contracted to receive a quantity of raw tomatoes sufficient to
process approximately 53 million pounds of paste. And it must
be taken as true for purposes of this motion that the farmers
Riverbend had contracted with were able to provide only 56-58%
of this raw tomato supply. These facts thus raise a material
issue of fact whether the tomato crop shortage forced Riverbend
to allocate its available supply of tomato paste under § 2-615.
3. Was Riverbend's Allocation "Fair and
Plaintiff's third argument is that Riverbend has failed under
§ 2-615(b) to make a "fair and reasonable" allocation of the
shortfall. Plaintiff admits that in making
its allocation Riverbend considered such factors as customer
loyalty, past performance, needs, the relationship between
Riverbend and the customer, and Riverbend's projections of
potential future sales to the customer. Item 28, at 12.
Plaintiff argues, however, that Riverbend did not treat it
equally. See Terry v. Atlantic Richfield Co., 72 Cal.App.3d 962,
140 Cal.Rptr. 510, 513 (1977). Riverbend does not contest
Riverbend argues instead that § 2-615 does not
require equal allocation. See N.Y.U.C.C. § 2-615 comment 11
(1964) ("this section seeks to leave every reasonable business
leeway to the seller"). See also Intermar, Inc. v. Atlantic
Richfield Co., 364 F. Supp. 82, 99 (E.D.Pa. 1973) ("The fact
that plaintiff, under the allocation formula, receives less
than its marketing needs is the result of its lack of sales
history in 1972 rather than the result of any arbitrary and
discriminatory conduct by the defendant. . . ."); J. White & R.
Summers, UNIFORM COMMERCIAL CODE § 3-9 (1988).*fn4
The court finds that the question whether Riverbend's
allocation to Cliffstar was "fair and reasonable" is one of
fact to be decided by the jury.*fn5 See Alimenta, 861 F.2d at
654; Terry, 140 Cal.Rptr. at 512 ("Except where there is no
room for a reasonable difference of opinion, the reasonableness
of an act or omission is a question of fact, that is, an issue
which should be decided by a jury and not on a summary judgment
motion."); 3 W. Hawkland, UNIFORM COMMERCIAL CODE SERIES §
4. Was Cliffstar "Seasonably" Notified of the Shortage
and Its Allocation Quota?
Finally, plaintiff argues that Riverbend failed to
"seasonably" notify it of its allocation amount. N.Y.U.C.C.
§ 2-615(c). Riverbend sent a letter on September 27, 1988
informing Cliffstar they were being forced by the crop shortage
to reevaluate all contracts.*fn6
Riverbend did not, however,
inform Cliffstar of its allocation quota at that time. This did
not take place formally by letter until November 21, 1988. Item
34, Ex. RB-7.
Although plaintiff is correct that § 2-615(c) requires
notification not only of the facts of delay or non-delivery but
also, where allocation is contemplated, of the estimated quota
that will be delivered to buyer, as a practical matter, a
seller may not be able to provide this notice instantaneously.
As one hornbook notes:
In any given case, however, it may be difficult to
know whether the excusing contingency will merely
cause a delay in delivery or absolutely preclude
it. In that circumstance the seller faces a
problem as to what kind of notice he must give and
whether and when he should begin a plan of
allocation. The seller
should be protected if he gives seasonable notice
of the delay and indicates in good faith that he
is uncertain as to whether the delay will ripen
into nondelivery and that he will keep the buyer
informed of developments as they unfold. Of
course, the seller must, thereafter, make good on
his promise to keep the buyer informed, and as
soon as the seller knows that nondelivery will
occur he must notify the buyer of this fact.
3 W. Hawkland, UNIFORM COMMERCIAL CODE SERIES § 2-615:13.
In this case, Mr. Seal at Riverbend was not fully aware of
the extent of the tomato crop shortage until mid-to-late
September. A short time later, Mr. Seal informed Cliffstar that
it would have difficulty filling the order completely.
Thereafter, Riverbend was in regular contact with Cliffstar
discussing the tomato paste contract. Although its final,
formal notification of the amount Cliffstar would be allocated
did not come until November 21, 1988, the court does not agree
with plaintiff that, as a matter of law, this notice was
unseasonable. See Alimenta, 861 F.2d at 654.
B. Was the Contract Modified?
Riverbend argues in the alternative that, should § 2-615 not
apply, it is not liable because plaintiff agreed to a
modification of the original contract. Plaintiff counters that,
although Mr. Seal at Riverbend and Mr. Diodato at Cliffstar
engaged in significant ongoing settlement-modification
negotiations, see Item 34, Exs. RB-7 to RB-28, no agreement was
ever reached in writing between the parties. See N.Y.U.C.C. Law
§§ 2-201, 2-209(3) (McKinney 1964).
The court agrees with plaintiff that no binding modification
was ever reduced to writing between the parties. However, under
N YU.C.C. § 2-209(4), "[a]lthough an attempt at modification
or rescission does not satisfy the requirements of subsection
(2) or (3) [that there be a writing,] it can operate as a
waiver." A party may waive its rights under a contract either
through its conduct or by its words. Federal Express Corp. v.
Pan Am. World Airways, 623 F.2d 1297, 1302 (8th Cir. 1980)
(applying New York law). There remains a genuine issue of fact
as to whether plaintiff Cliffstar waived its rights under the
Accordingly, for all of the foregoing reasons, the motion for
summary judgment on behalf of Cliffstar is denied.
II. CROSS CLAIM FOR PAYMENT ON DELIVERY OF LEMON CONCENTRATE
AND PARTIAL DELIVERY OF THE TOMATO PASTE CONTRACT
There are no genuine facts in dispute here. In its
cross-complaint, Item 6, Riverbend alleges that in July, 1988,
Cliffstar agreed to purchase and Riverbend agreed to sell
127,817.89 pounds of lemon concentrate. The deliveries were
made on December 29, 1988, and January 4, 1989. The price for
the concentrate was $249,244.88. Cliffstar essentially admits
these facts in its reply, Item 7, ¶¶ 4-6. Most importantly,
however, Cliffstar ("plaintiff")
admits that plaintiff has refused to pay for said
deliveries but alleges that plaintiff is not
obligated to pay for said deliveries because
plaintiff has the right to set off the amount of
the damages suffered by plaintiff as set forth in
Item 7, ¶ 7.
Cliffstar also admits that Riverbend delivered four shipments
of tomato paste.*fn7 Riverbend's alleged cost for these
deliveries was $58,456.38. Cliffstar admits it has refused to
pay for these deliveries, but alleges it is not obligated to do
so because it may set off these costs against its initial
claim. Item 7, ¶ 14.
A. N.Y.U.C.C. § 2-717
Cliffstar first argues that it is entitled to offset
Riverbend's counterclaim against its initial claim under
N YU.C.C. Law § 2-717 (McKinney 1964). This section provides:
The buyer on notifying the seller of his intention
to do so may deduct all or any part of the damages
resulting from any breach of the contract from any
part of the price still due under the same
N YU.C.C. § 2-717 (emphasis added). The official comment to
this section emphasizes that "[t]o bring this provision into
application the breach involved must be of the same contract
under which the price in question is claimed to have been
earned." N.Y.U.C.C. § 2-717, comment 1 (emphasis added).
There is no doubt that Cliffstar is entitled to the benefits
of this section with respect to the four shipments of tomato
paste made by Riverbend in late 1988 and early 1989. By
Riverbend's own admission, these deliveries were part of the
contract for 3.2 million pounds of tomato paste which forms the
central dispute of this case. See Item 6, ¶¶ 10-12.
Cliffstar is not, however, entitled under § 2-717 to offset
the price for its order of lemon concentrate from damages
claimed on the tomato paste contract because these two disputes
clearly involve separate contracts. Sharp Elec. Corp. v.
Arkin-Medo, Inc., 86 A.D.2d 817, 452 N.Y.S.2d 589, 590 (1982),
aff'd, 58 N.Y.2d 986, 461 N.Y.S.2d 1014, 448 N.E.2d 799 (1983);
Sunbeam Corp. v. Morris Distrib. Co., 55 A.D.2d 722, 389
N YS.2d 173, 174 (1976); Hellendall Distrib., Inc. v. S.B.
Thomas, Inc., 559 F. Supp. 573, 574-75 (E.D.Pa. 1983), aff'd,
755 F.2d 920 (3rd Cir. 1985); Artmark Assoc., Inc. v. Allied
Tube & Conduit Corp., 32 U.C.C. Rep't Serv. 454, 456 (N.D.Ill.
Cliffstar argues that the order for tomato paste (P.O. No.
100011) and lemon concentrate (P.O. No. 100028) were part of a
single underlying agreement. But the mere fact that these two
purchases were negotiated at about the same time, and that
Cliffstar sought to use its leverage in purchasing lemon
concentrate to obtain the best price for tomato paste,
see Item 21 (Diodato affidavit), does not make these two orders
part of the same contract. As Riverbend notes:
the lemon concentrate agreement and the tomato
paste agreement were reached on different dates;
their terms are set forth within two separate and
distinct documents; neither agreement refers to
the other; there are no facts indicating that the
terms of one are related to and/or are conditional
upon the other; and Cliffstar's Complaint itself
treated the tomato paste contract as separate and
distinct from the lemon concentrate contract. . ..
Item 38, at 1-2. The court finds these arguments
B. State Law
Cliffstar argues in the alternative that even if it is not
entitled to offset under N.Y.U.C.C. § 2-717, it is entitled to
do so under state law.
As an initial matter, Cliffstar is correct in noting that the
non-application of § 2-717 does not prohibit a frustrated buyer
from seeking a set off of its losses from one contract against
the price due seller on another contract, where state law
permits this. See 3 W. Hawkland, UNIFORM COMMERCIAL CODE SERIES
§ 2-717:03; 4 R. Anderson, UNIFORM COMMERCIAL CODE § 2-717:4,
5. The cases cited by Cliffstar, however, do not hold that a
buyer is entitled to this set off as a matter of right.*fn9
On the contrary, in a long line of cases, New York courts
have granted summary judgment where a counterclaim is not so
interwoven with the main claim that entry
of judgment should be withheld. See Green Acres Assoc. v.
Pergament Distrib., Inc., 143 A.D.2d 974, 533 N.Y.S.2d 583, 584
(1988) (awarding summary judgment where "defendants explicitly
conceded their liability for the outstanding debts"); P.S.
Griswold Co. v. Cortland Glass Co., 138 A.D.2d 869, 525
N YS.2d 973, 974-75 (Sup. Ct. 1988) (summary judgment granted
for subcontractor on completed work); Rivertone Corp. v.
General Thermoforming Corp., 90 A.D.2d 906, 456 N.Y.S.2d 869,
870 (Sup.Ct. 1982) (plaintiff admitted outstanding debt to
defendant); Boro Lumber Co. v. S & S Corrugated Paper Mach.
Co., 85 A.D.2d 675, 445 N.Y.S.2d 519, 520 (Sup. Ct. 1981)
(summary judgment granted on delivered building materials).
This relief has been stayed, however, where there is "some
articulable reason for concluding that [defendant] is
financially unstable and might be unable to satisfy any
judgment eventually secured by the [plaintiff]." Elda Dev.
Corp. v. Wall, 101 A.D.2d 1000, 476 N.Y.S.2d 690, 690-91
(1984). See also P.S. Griswold Co., 525 N.Y.S.2d at 975.
In the present case, the court finds that the tomato paste
contract and the lemon concentrate contract are not so
interwoven so as to preclude summary judgment on the latter.
Therefore, plaintiff's motion for summary judgment is denied on
the present record and defendant Riverbend's motion for summary
judgment on the lemon concentrate contract is granted. The
motion for summary judgment on the tomato paste, which was
actually delivered to Cliffstar, is also denied. Defendant
shall prepare a proposed partial judgment in accordance with
this order upon five days notice to plaintiff.