The opinion of the court was delivered by: JOHN R. BARTELS
MEMORANDUM-DECISION AND ORDER
This is a diversity action for breach of contract, breach of implied warranty of merchantability and negligent misrepresentation concerning a sale of allegedly counterfeit "Drakkar Noir" men's fragrance.
I. Background and Contentions of Parties
The Drakkar Noir trademark is owned by Parfums Guy Laroche, S.A., ("Guy Laroche") a subsidiary of L'Oreal, S.A., both of which are French corporations. Procosa, Inc., ("Procosa"), which is a Brazilian corporation owned by L'Oreal, is the exclusive Brazilian manufacturer and distributor of Drakkar Noir. Cosmair, Inc., ("Cosmair"), which is an independent domestic corporation, is the exclusive United States distributor of Drakkar Noir. Drakkar Noir manufactured by Procosa in Brazil is sometimes imported and sold in the United States through unaffiliated third parties.
Both plaintiff Model Imperial Supply Co., Inc. ("Model") and defendant Westwind Cosmetics, Inc. ("Westwind") are in the business of selling and distributing fragrances and cosmetics. The complaint alleges that Westwind, through defendant Barry Timberg, Westwind's President, and defendant Josh Widman, a Westwind employee, falsely or recklessly represented to Model that Westwind had for sale a supply of 1.7 oz. size Brazilian Drakkar Noir "pieces" manufactured by Procosa. A piece is a term used within the fragrance industry which refers to a single bottle of fragrance and its packaging. Model, which purchased 20,000 pieces of 1.7 oz. Brazilian Drakkar Noir from Westwind, alleges that they were counterfeit.
The complaint sets forth the following four causes of action: (1) breach of contract against Westwind; (2) breach of implied warranty against Westwind; (3) negligent misrepresentation against all defendants; and (4) misrepresentation and false designation of origin in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), against all defendants. Model seeks $ 163,280.07 in damages from Westwind, and $ 100,909.82 from Timberg and Widman to recover losses allegedly incurred from the purchase and resale of 10,847 of the 20,000 pieces. Defendants deny the allegations and claim that the pieces were genuine Drakkar Noir manufactured by Procosa. They counterclaim for $ 41,400 on an unpaid invoice to Model representing the final shipment of the pieces.
Summary judgment was granted in favor of defendants on the fourth cause of action. Model Imperial Supply Co. v. Westwind Cosmetics, Inc., 808 F. Supp. 943 (E.D.N.Y. 1992). The remaining three causes of action were tried without a jury for five days. At the close of the case, defendants moved pursuant to Fed.R.Civ.P. 15(b) to amend their answer to include the defense of accord and satisfaction. The Court reaches the following findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52.
1. Model was a Florida corporation, with its principal place of business in Boca Raton, Florida, at the time this action commenced. Model's shares are owned by its President, Harold Ickovics, and his mother. Model sells fragrances to retailers including Kroger Co. ("Kroger"), Walgreen Co. ("Walgreen"), and Jack Eckerd Co. ("Eckerd").
2. Defendant Westwind was a New York corporation, with its principal place of business in Brooklyn, New York, at the time this action commenced. Westwind's shares are owned by Timberg.
3. Defendant Timberg resided in Brooklyn, New York at the time this action commenced.
4. Defendant Widman resided in Brooklyn, New York at the time this action commenced.
5. The amount in controversy exceeds $ 50,000.00.
6. In December 1990, Ickovics, Timberg and Widman met at Model's former office located in Woodside, New York and discussed the possibility of Model purchasing from Westwind a supply of 1.7 oz. Drakkar Noir pieces manufactured by Procosa. Model had previously purchased Drakkar Noir manufactured by Procosa on two occasions and Ickovics knew that counterfeit Brazilian Drakkar Noir was sometimes sold in the United States. For this reason, Ickovics asked about the source of pieces. Timberg responded that Westwind had a contact in Brazil who could obtain Drakkar Noir which had been manufactured by Procosa and then sold to authorized Brazilian retailers.
7. The parties agreed that Model would purchase all the Brazilian Drakkar Noir Westwind could supply at a price of $ 11.50 per piece. Model agreed to pick up shipments from Westwind's warehouse at its expense.
8. From January to April 1991, Model purchased 20,000 pieces of 1.7 Oz. Drakkar Noir at $ 11.50 per piece from Westwind.
9. Model resold many of the 20,000 pieces which it purchased from Westwind to Kroger, Walgreen, and Eckerd. Model's average resale price per piece was $ 17.25, with an average profit per piece of $ 5.75. Trial Transcript, ("Tr.") at 114.
11. Although unknown to the parties at the time the sales occurred, Petzenbaum had previously sold suspect 1.7 Oz. Brazilian Drakkar Noir pieces to Allegis Trading Co. Cosmair routinely tests Drakkar Noir pieces at points of sale throughout the United States in order to protect its proprietary rights. Cosmair tested several of the pieces Petzenbaum sold to Allegis, determined they were counterfeit, and brought suit pursuant to the Lanham Act in the U.S. District Court for the Southern District of New York. Parfums Guy Laroche and Cosmair, Inc. v. Allegis Trading Corp., Marathon Freight Services, Inc., and John Doe Nos. 1-10, 90-CV-6724 (RWS) (S.D.N.Y. 1990). That action culminated in a judgment by consent enjoining defendants from selling counterfeit Drakkar Noir ...