The opinion of the court was delivered by: SCHEINDLIN
SHIRA A. SCHEINDLIN, U.S.D.J.:
Sumagh Textile Co., Ltd. ("Sumagh") moves for summary judgment seeking dismissal of the amended complaint filed by Hyosung America, Inc. ("Hyosung"). The complaint pleads nine causes of action, including claims arising from and relating to Sumagh's alleged breach of warranty, breach of contract, fraud, violation of both the Lanham Act and the Wool Products Labeling Act, and claims for compensatory and punitive damages. Hyosung alleges that Orkid Tex, Inc. ("Orkid") ordered fabric from Sumagh that was to contain 65% rayon and 35% wool but that, contrary to the supply orders, the fabric Sumagh supplied contained no more than 30% wool. Thereafter, Orkid assigned its rights and interests in the underlying contracts to Hyosung.
For the reasons stated below, Sumagh's motion is granted. Hyosung's amended complaint is this matter is thus hereby dismissed.
A. Agreement Between Hyosung and Orkid
When the goods were shipped, Hyosung cleared them through Customs and arranged to ship them to the customer. Id. P 8. Hyosung then collected payment for the shipment from the customer, and subsequently remitted payment to Orkid, minus various charges. Id. P 9. If "for any reason" Hyosung did not receive payment of the customer's purchase order in full -- such as because of "merchandise disputes" -- Hyosung could withhold payment to Orkid. Id. P 10. Orkid retained the responsibility for "obtaining any required import or export licenses for the Products and for compliance with all laws and regulations governing the sale, purchase or use of the products." Id. P 11. Any cancellation of a customer's purchase order "whether before or after production ha[d] been completed or before or after delivery of shipment to the Customers" was Orkid's "total responsibility." Id. P 12. The Agreement was never terminated, and thus governed the fabric sales at issue in this action. Id. P 15.
B. Orkid Makes a Deal with San Moire
Sometime in late 1992 or early 1993, Mervyn's, a department store chain, placed an order with San Moire, Inc. ("San Moire") for garments made of rayon/wool fabric. Def. 3(g) P 65. San Moire had discussions with Orkid regarding rayon/wool fabric which San Moire needed to produce garments for Mervyn's. Id. P 67. After providing Orkid with a sample of the type of fabric it wanted, San Moire placed a series of purchase orders with Orkid for production of the fabric. Id. PP 68-69. Specifically, San Moire requested fabric consisting of 65% rayon and 35% wool. Id. P 70.
In February and March 1993, Sumagh sent Orkid a series of memoranda, referring to a range of qualities and prices for rayon/wool fabric that Sumagh could provide to Orkid. Eventually, Sumagh agreed to provide fabric to Orkid.
In June 1993, Orkid made the first delivery of fabric to San Moire, which San Moire accepted.
Id. P 109. San Moire, in turn, sent sample garments to Mervyn's, to which Mervyn's did not object. Id. P 110. In a memorandum to Sumagh dated July 27, 1993, Orkid confirmed that it was satisfied with the quality of rayon/wool fabric that Sumagh had been shipping, noting: "We don't care wear (sic) you get the . . . goods from as long as its the same quality that you been shipping." Id. PP 111-12.
C. The San Moire Deal Goes Bad
But the deal soon soured. On September 30, 1993, San Moire sent a letter to Hyosung and Orkid, which stated: "There is a problem with the content of the Rayon Wool goods purchased. All payments of invoices for the Rayon Wool fabrics will not be paid until the problem is resolved." Def. 3(g) P 113.
On October 4, 1993, Mervyn's sent a letter to San Moire, in which it rejected "the entire shipment of rayon/wool merchandise" sent by San Moire. Id. P 114. Mervyn's stated that it was rejecting the goods because "Mervyn's purchase order required that the fabric content of the merchandise be 65% rayon and 35% wool," that the fabric content varied from that amount, and that "no fabric content tolerance is allowed." Id. P 115. After October 4, 1993, San Moire continued to cut rayon/wool fabric received from Orkid into garments. Id. P 116. Although San Moire never returned any of the rayon/wool fabric, it refused to pay Hyosung for some of the fabric. Id. P 117.
Prior to the commencement of this action, Orkid "assigned all of its rights, title and interests for and to the various contracts at issue herein with Sumagh to Hyosung." Id. P 137 (citing Declaration of Frederick E. Sherman, dated Oct. 2, 1995, Exhibit 25, P 1).
On October 18, 1994, Hyosung filed a complaint against San Moire in New York State Supreme Court. Def. 3(g) P 118. Hyosung alleged that it delivered rayon/wool fabric to San Moire, that San Moire had a reasonable opportunity to inspect it and did not reject it, and that San Moire wrongly refused to pay for the fabric. Id. PP 121-23. Hyosung sought damages of $ 556,199.25, the amount of the unpaid fabric invoices. Id. PP 124-25. Hyosung and San Moire eventually settled this claim for $ 180,000. Id. PP 126-27. After $ 130,000 had been paid to Hyosung pursuant to the Stipulation of Settlement, San Moire advised Hyosung that it would liquidate its remaining assets; the "residual" claim of $ 50,000 was then settled for $ 25,000. Affidavit of J.R. Cho, Vice President of Hyosung, dated October 26, 1995, PP 5-6.
On November 9, 1994, Hyosung filed a complaint against Orkid in New York State Supreme Court. Def. 3(g) P 128. In its complaint, Hyosung alleged that Orkid authorized Sumagh to manufacture rayon/wool textile fabric with a fiber content of "less than 35% wool and greater than 65% rayon." Hyosung later sought a default judgment. Id. P 133. There is no indication in the record as to whether a default judgment was entered.
Hyosung commenced this action against Sumagh on January 31, 1994, seeking damages of "not less than" $ 600,000. Am. Cplt. P 68.
III. Standard for Summary Judgment
Summary judgment "is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed 'to secure the just, speedy and inexpensive determination of every action.'" Celotex Corp. v. Catrett, 477 U.S. 317, 327, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986) (quoting Fed. R. Civ. P. 1). The court's function on a summary judgment motion is "carefully limited to discerning whether there are any genuine issues of material fact to be tried, not to deciding them." Gallo v. Prudential Residential Services, Ltd. Partnership, 22 F.3d 1219, 1224 (2d Cir. 1994). Thus, "[a] court may not grant a motion for summary judgment unless it determines that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); Celotex, 477 U.S. at 322-23 (1986). The party seeking summary judgment bears the initial burden of showing the absence of a genuine factual dispute. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970). In deciding a summary judgment motion, the court should resolve all ambiguities and draw all factual inferences in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986); Brady v. Town of ...