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FINNISH FUR SALES v. JULIETTE SHULOF FURS

July 12, 1991

FINNISH FUR SALES CO., LTD. AND OKOBANK OSUUSPANKKIEN KESKUSPANKKI OY, PLAINTIFFS,
v.
JULIETTE SHULOF FURS, INC., GEORGE SHULOF AND JULIETTE SHULOF, DEFENDANTS.



The opinion of the court was delivered by: Leisure, District Judge.

OPINION AND ORDER

This is an action to collect sums allegedly owed in connection with furs purchased at two auctions in Vantaa, Finland. Plaintiff Finnish Fur Sales Co., Ltd. ("FFS"), asserts its claim of failure to pay for and clear 2,469 fox pelts against defendants Juliette Shulof Furs, Inc. ("JSF"), and George Shulof. Plaintiff Okobank Osuuspankkien Keskuspankki Oy ("Okobank") asserts its claim of failure to honor a bill of exchange against defendants JSF and Juliette Shulof.

Defendants George and Juliette Shulof now move the Court for summary judgment dismissing the individual claims against each of them. Plaintiffs oppose defendants' motion and cross-move for summary judgment against all defendants.

BACKGROUND

FFS is a limited company organized under Finnish law, which sells fur pelts raised by Finnish breeders at public auctions held several times each year. The auctions are conducted under certain Conditions of Sale ("Conditions"), which are listed in the auction catalogue, a copy of which is given to each prospective bidder in advance of the auction. A one-page English translation of the Conditions appears on the inside front cover of the catalogue.

JSF is a New York corporation that has conducted a fur dealing business for approximately 15 years. George Shulof, an officer of JSF, has been in the fur business since 1935. Mr. Shulof attended the FFS auctions held in Vantaa, Finland, in January and May 1987. He purchased over $500,000 worth of skins at the January auction, and some $700,000 worth of skins at the May auction. It is undisputed that at each auction he was the actual bidder. JSF had not sent a bidder to the FFS auctions during the twenty-five-year period from 1959 to 1984, but Mr. Shulof had personally attended the FFS auction in December 1986.

The parties apparently do not dispute the fact that JSF paid for and cleared the majority of the skins purchased at the two 1987 auctions, with the exception of 2,469 fox pelts worth $290,048.17. The parties also do not dispute that JSF made certain payments against the uncleared skins, leaving an unpaid balance of $202,416.85, plus interest.

Between December 1987 and December 1988, JSF gave FFS resale instructions regarding a number of the uncleared skins. FFS asserts that it was unable to sell the skins at the minimum resale prices set by JSF. Thereafter, FFS decided to liquidate JSF's account, to which JSF agreed in March 1989. FFS sold the remaining uncleared skins at its May and September 1989 auctions. FFS alleges damages of $153,502.39.

FFS claims that, in addition to the liability of JSF, Mr. Shulof is personally liable for this debt, based on Finnish law, the custom and practice of the fur trade, and the provisions of section 4 of the Conditions. Section 4 provides:

  Any person biding at the auction shall stand
  surety as for his own debt until full payment is
  made for purchased merchandise. If he has made
  the bid on behalf of another person, he is
  jointly and severally liable with the person for
  the purchase.

Conditions § 4 ¶ 2. George Shulof denies any personal liability on the grounds, inter alia, that the provision is unenforceable under both New York and Finnish law.

Okobank's claim arises from a line of credit arranged by FFS in November 1988 to allow JSF to clear some of the remaining skins. JSF made a cash down payment and accepted a bill of exchange (the "Bill of Exchange") for $30,328.39, due February 7, 1989. JSF also executed an agreement entitled "Confirmation in Case of Delayed Payment" ("Confirmation"), dated December 16, 1988, which called for interest at an annual rate of 16% subsequent to the due date.

According to plaintiffs, in January 1989, Okobank became holder in due course of the Bill of Exchange, which was presented for collection on or about February 7, 1989, at Bank Leumi in New York, but was dishonored. As of July 31, 1990, Okobank claimed principal and interest due amounting to $37,480.90.

The Bill of Exchange was signed "Juliette A. Shulof" above the printed name "Juliette Shulof Furs Inc." Okobank contends, and Mrs. Shulof denies, that this signature renders Mrs. Shulof liable in her individual capacity.

In addition to defendants' argument that, as a matter of law, George and Juliette Shulof cannot be held personally liable in this action, defendants also contend that fact issues concerning plaintiffs' alleged failure to mitigate damages when selling the remaining uncleared skins preclude the entry of summary judgment against JSF.

DISCUSSION

I.  Standard for Summary Judgment

Federal Rule of Civil Procedure 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 if, '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.'" United States v. All Right, Title & Interest in Real Property, etc., 901 F.2d 288, 290 (2d Cir. 1990) (quoting Murray v. National Broadcasting Co., 844 F.2d 988, 992 (2d Cir.), cert. denied, 488 U.S. 955, 109 S.Ct. 391, 102 L.Ed.2d 380 (1988)). Summary judgment may be granted "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

The substantive law governing the case will identify the facts that 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 2510; see also R. C. Bigelow, Inc. v. Unilever N.V., 867 F.2d 102, 107 (2d Cir.), cert. denied, ___ 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 "demonstrate the absence of a genuine issue of material fact." Celotex, supra, 477 U.S. at 323, 106 S.Ct. at 2552; 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.

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 (quoting Fed.R.Civ.P. 56(e)). "Conclusory allegations will not suffice to create a genuine issue. There must be more than a 'scintilla of evidence,' and more than 'some metaphysical doubt as to the material facts.'" Delaware & H. Ry. v. Consolidated Rail Co., 902 F.2d 174, 178 (2d Cir. 1990) (quoting Anderson, supra, 477 U.S. at 252, 106 S.Ct. at 2512, and Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1355, 89 L.Ed.2d 538 (1986)).

II. Liability of George Shulof

A.  Choice of Law

Federal courts sitting in diversity must apply the choice of law rules of the forum state. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). In this case, application of New York choice of law analysis is required.

Section 15 of the Conditions provides that "[t]hese conditions are governed by Finnish law." Choice of law clauses are routinely enforced by the courts of this Circuit, "if there is a reasonable basis for the choice." Morgan Guaranty Trust Co. v. Republic of Palau, 693 F. Supp. 1479, 1494 (S.D.N.Y. 1988) (citing Restatement (Second) of Conflict of Laws § 187 (1971)), vacated on other grounds, 924 F.2d 1237 (2d Cir. 1991). New York courts also generally defer to choice of law clauses if the state or country whose law is thus selected has sufficient contacts with the transaction. See, e.g., Zerman v. Ball, 735 F.2d 15, 20 (2d Cir. 1984); Walter E. Heller & Co. v. Video Innovations, Inc., 730 F.2d 50, 52 (2d Cir. 1984); 600 Grant St. Assocs. Ltd. Partnership v. Leon-Dielmann Inv. Partnership, 681 F. Supp. 1062, 1064 (S.D.N.Y. 1988). Under those circumstances, "New York law ...


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