The opinion of the court was delivered by: Sweet, District Judge.
Plaintiff National Microsales Corporation ("NMC") has moved for summary
judgment on its complaint against defendant Chase Manhattan Bank, N.A.
("Chase"). NMC has also moved for sanctions against Chase for its conduct
in discovery. For the following reasons, the motion for summary judgment
is granted in part and denied in part. The motion for sanctions is denied
at this time, with leave to renew at the close of litigation.
The parties and the underlying dispute are described in more detail in
the earlier opinion in this case dated October 13, 1989, 1989 WL 125884
as amended on October 20, 1989 ("the Opinion"). NMC v. Chase Manhattan
Bank, 88 Civ. 8437 (RWS) (S.D.N.Y. Oct. 20, 1989). NMC is a Connecticut
corporation engaged in the business of buying and selling computer output
microfilming ("COM") equipment. Chase is a national bank which in 1988
entered into negotiations with NMC to sell some of its used COM equipment
to NMC for resale. When Chase subsequently sold the equipment to a third
party, NMC filed this diversity suit alleging breach of contract.
In June 1989, Chase moved for summary judgment dismissing NMC's
complaint on the basis of the Statute of Frauds. N.Y.U.C.C. §
2-201(1). NMC cross-moved for summary judgment striking Chase's
affirmative defense of the Statute of Frauds on the grounds that the
contract was covered by the "merchant's exception" to the Statute.
N.Y.U.C.C. § 2-201(2). Both motions were denied in the Opinion,
because there was a factual dispute as to whether Chase was a "merchant"
for UCC purposes. Opinion at 6-7.
The parties thereafter engaged in discovery related to the issue of
Chase's status as a merchant of COM equipment. On November 30, 1990, NMC
renewed its motion for summary judgment striking Chase's Statute of
Frauds defense and also sought entry of judgment in its favor. The motion
was argued on December 21, 1990.
Chase's response is based primarily on the affidavit of George J.
Stehle ("Stehle"), Chase's vice president in charge of office purchasing
and contracts administration. Stehle testified that Chase never purchases
goods for resale and that Chase has no specialized knowledge concerning
the goods which it buys for its own use. He also stated that Chase had no
familiarity with the market for the equipment which it purchased, and
that when it disposes of surplus goods, it generally sells them to
resellers, rather than end users, and usually sells the equipment for
less than fair market value.
The standards for summary judgment are set forth in the Opinion. The
court is not "to weigh the evidence and determine the truth of the matter
but to determine whether there is a genuine issue for trial." Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91
L.Ed.2d 202 (1986). Summary judgment is warranted only if "the evidence
is such that a reasonable jury could not return a verdict for the
nonmoving party." Id. at 248, 106 S.Ct. at 2510.
1. Chase is a Merchant for Purposes of the UCC.
Section 2-104 of the UCC defines a merchant as "a person who deals in
goods of the kind or otherwise by his occupation holds himself out as
having knowledge or skill peculiar to the practices or goods involved in
the transaction. . . ." N.Y.U.C.C. § 2-104(1). The Official Comment
to this section states that
The special provisions as to merchants appear only in
this Article and they are of three kinds. Sections
2-201(2), 2-205, 2-207 and 2-209 dealing with the
statute of frauds, firm offers, confirmatory
memoranda, and modification rest on normal business
practices which are or ought to be typical of and
familiar to any person in business. For purposes of
these sections almost every person in business would,
therefore, be deemed to be a "merchant" under the
language "who . . . by his occupation holds himself
out as having knowledge or skill peculiar to the
practices . . . ...