facts indicating that there was such collusion on the part of HSBC and Eli. HFH speculates that oral depositions may uncover bad faith, but the facts do not reveal a triable issue of fact relating to HFH's liability for conversion.
Next, HFH disputes the amount recovered by HSBC after the liquidation by Eli, and the way that this amount was applied to offset Eli's outstanding debt to HSBC. Specifically, HFH refers to answers to interrogatories and supporting affidavits that contain divergent statements about whether the proceeds from the liquidation were applied toward "outstanding interest owed under the letters of credit" (Answer to Interrogatory No. 2), or toward "Eli's indebtedness to HSBC incurred under an overdraft loan facility between HSBC and Eli that was also secured by HSBC's security interest in Eli's inventory and to the reduction of interest and expenses owed under the Letter of Credit" (LeClair Mar. 29 Aff., P 6). This Court does not believe this discrepancy creates a triable issue of fact relating to liability. The amount of the proceeds and the extent to which the proceeds were applied toward Eli's outstanding debt under the letters of credit is an issue of damages that HFH will not be precluded from investigating through further discovery. This is especially true in light of the fact that it appears the proceeds were not sufficient to discharge the debt owed by Eli to HSBC under the letters of credit.
Finally, HFH argues that issues of damages are so intertwined with issues of liability that summary judgment regarding liability is inappropriate, citing Klinger v. Rose, 291 F. Supp. 456 (S.D.N.Y. 1968) and Blau v. Lamb, 163 F. Supp. 528 (S.D.N.Y. 1958). This is not the case. HFH is liable for conversion of the goods in each of the shipments, as discussed fully above. The only unresolved issues involve damages. These issues are limited to the value of the goods converted by HFH, and the extent to which the goods secured the debt owed by Eli under the letters of credit. Although these issues may justify some investigation into the results of the liquidation of other collateral, summary judgment on the issue of liability is not precluded. This Court will permit HFH to conduct the appropriate discovery and raise these issues at a trial on damages, if they are relevant.
Therefore, summary judgment for HSBC is granted as to the issue of HFH's liability for conversion of all three shipments. Summary judgment is denied as to the issue of damages, for the reasons discussed above.
IT HEREBY IS ORDERED, that plaintiff's motion for summary judgment is GRANTED, as to the issue of HFH's liability for conversion of all three shipments. Plaintiff's motion is DENIED, as to the issue of damages.
FURTHER, that counsel for the parties shall appear before this Court for a status conference on October 21, 1992 at 9:00 a.m. in Part IV, Mahoney State Office Building, 65 Court Street, Buffalo, New York.
Dated: October 1, 1992
Buffalo, New York
WILLIAM M. SKRETNY
United States District Judge