The opinion of the court was delivered by: Sweet, District Judge.
Defendant Schoeller Technical Papers, Inc. ("Schoeller") has
moved pursuant to Rule 56, Fed.R.Civ.P. for summary judgment
dismissing the two remaining counts in the Amended Complaint of
plaintiff Paper Corporation of the United States ("Paper
Corporation"). For the reasons set forth below, the summary
judgment motion is denied.
Paper Corporation — a division of Paper Corporation of
America, Inc. — is a Delaware corporation with its principal
place of business in Valley Forge, Pennsylvania. Paper
Corporation serves as an independent distributor of paper
Schoeller — a wholly owned subsidiary of Felix Schoeller Jr.
Gmbh & Company Kg ("FSG") a German Corporation — is a business
organization located in Pulaski, New York. Schoeller
manufactures high quality special paper that is used by the
photographic industry, greeting card manufacturers, and others.
This action, which Paper Corporation commenced on April 13,
1989, arises out of a dispute relating to an alteration in the
relationship between the two companies. Paper Corporation's
original complaint (the "Complaint") alleged breach of
contract, promissory estoppel and tortious interference with
On May 19, 1989, Schoeller moved, pursuant to Fed.R.Civ.P.
12(b)(6) to dismiss the Complaint. In an opinion of October 11,
1989 ("Schoeller I"), the court dismissed the Complaint, except
for that portion of the breach of contract claim which related
to sales of greeting card paper to Hallmark. While the court
found that the alleged Hallmark agreement came within the scope
of the Statute of Frauds as it could not be performed within
one year, the court did not dismiss the Hallmark claim at that
time because of uncertainty as to whether the agreement as
However, whether these documents [Exhibits 3 and 4
to the Complaint] constitute a signed writing
sufficient to satisfy the Statute of Frauds
regarding Hallmark is a much closer question
— too close for the court to resolve as a matter
of law on a motion to dismiss, which requires a
court to draw all inferences in favor of the
nonmoving party. Taken together, Schoeller's
letters could be interpreted at least as a
commitment to supply Hallmark — through Paper
Corporation exclusively — greeting card paper
amounting to 4,000 tons in 1988, 6,000 in 1989, and
5,000 tons in 1990, 1991, and 1992, respectively.
Schoeller I, 724 F. Supp. 110, 117 (S.D.N.Y. 1989).
On January 11, 1990, Paper Corporation amended its complaint
(the "Amended Complaint"). The Amended Complaint alleged breach
of contract, fraud, quantum meruit, promissory estoppel,
tortious interference with business relations and unfair
On November 19, 1990, Paper Corporation moved for leave to
file a second amended complaint, in which it sought to replead
all of the previously dismissed claims, as well as to allege
the surviving portions of the Amended Complaint. In an Opinion
of March 26, 1991 ("Schoeller III"), 759 F. Supp. 1039, the
court denied Paper Corporation leave to amend.
On May 9, 1991, Schoeller filed the instant summary judgment.
Oral argument was heard on May 23, 1991, and the motion was
considered fully submitted as of that date.
The business relationship between Paper Corporation and
Schoeller, pursuant to which Paper Corporation acted as the
sales agent for Schoeller's greeting card paper (the "greeting
card business"), began in 1964 and continued until early 1989,
when it was terminated by Schoeller.
As sales agent for Schoeller greeting card paper, Paper
Corporation developed substantial business with purchasers of
such paper, including Hallmark Cards Inc. ("Hallmark"). Paper
Corporation procured orders from Hallmark, purchased paper from
Schoeller and resold it to Hallmark to fill such orders.
Hallmark would on an annual basis communicate to Paper
Corporation its commitment to certain volume requirements over
the approaching year, and Paper Corporation would communicate
that information to Schoeller. The only manner in which
Hallmark ordered Schoeller paper from Paper Corporation was in
purchase orders that it submitted to Paper Corporation.
Hallmark also relied upon Paper Corporation to resolve quality
problems with Schoeller.
Paper Corporation derived no compensation from Schoeller
during the course of this business relationship; rather, Paper
Corporation's profit consisted of the differential between the
price it paid Schoeller for Schoeller paper and the price it
charged Hallmark for that paper.
As stated above, Schoeller is a wholly-owned subsidiary of
FSG, a German corporation. Before February 1986, FSG had only
a 50% interest in Schoeller, with Mead Corporation ("Mead")
owning the other half. In February, 1986, Mead sold its
interest in Schoeller to FSG.
In the spring of 1987, Hans Michael Gallenkamp
("Gallenkamp"), the chief executive officer of FSG as well as
the chairman of the board of Schoeller, and FSG became aware of
increased demand for the photographic paper produced by FSG. To
fill that demand, FSG management determined to commit Schoeller
to producing photographic paper rather than greeting card
paper. Gallenkamp accordingly asked Schoeller's then president,
Richard O. Gall ("Gall") to arrange for Paper Corporation to
announce to its customers, including Hallmark, that Schoeller
intended to stop producing greeting card papers. When it later
became clear that Schoeller would not be experiencing as much
increased demand in the photographic paper business as
anticipated, Schoeller management decided that Schoeller would
have to attempt reentry into the greeting card business, but
would this time produce smaller quantities of greeting card
paper. Schoeller asked Paper Corporation to effect reentry.
A Hallmark internal memorandum of July, 1987 reflects
Schoeller's commitment to provide certain maximum quantities to
Hallmark through 1990, as communicated to Hallmark through
Robert F. Fitzgerald ("Fitzgerald"), the President of Paper
A letter from Gall of August 24, 1987 sets forth Schoeller's
agreement to sell certain maximum volumes to Hallmark through
Paper Corporation through 1990.
In June 1988, Gerald Kempner ("Kempner") replaced Gall as
President of Schoeller.
In a letter of August 18, 1988, Schoeller advised Paper
Corporation of Schoeller's commitment to supply Hallmark with
specified quantities of paper, set forth in metric tons,