The opinion of the court was delivered by: Ronald L. Ellis, U.S. Magistrate Judge
Plaintiff Acciai Speciali Terni USA, Inc. ("AST-USA") filed a complaint
Rafael Momene ("Momene") and EMS Industrial
Corporation ("EMS") in the Supreme Court of the State of New York, County
of New York, on May 25, 1999. On April 11, 2000, AST-USA filed an amended
complaint claiming damages for breach of contract, breach of fiduciary
duty and diversion of sales. On April 24, 2000, defendants removed the
case to federal court asserting diversity subject matter jurisdiction
pursuant to 28 U.S.C. § 1332 (a). On March 30, 2001, Momene and EMS
(collectively, "defendants") moved for partial summary judgment on the
first, third, and ninth causes of action pursuant to Rule 56 of the
Federal Rules of Civil Procedure. AST-USA filed its own motion for
partial summary judgment on the sixth, seventh, and eighth causes of
action on April 2, 2001. For the reasons discussed below, both parties'
motions are GRANTED.
AST-USA is a domestic corporation organized and existing under the laws
of the State of New York which markets stainless steel and other metal
products in the form of sheets and coils. Amended and Supplemental
Complaint ("Amd. Cmplt.") at ¶ 1; Defendants' Local Rule 56.1(a)
Statement of Undisputed Material Facts at 1. EMS is a corporation
organized under the laws of the State of Delaware, and is engaged in the
wholesale industrial metals business, specializing in marketing,
selling, and/or trading specialty steel products in the Latin American
market. Id. Momene is the president and sole shareholder and director of
EMS, and has been actively involved in the business of marketing,
selling, and/or trading industrial metals throughout the world for
approximately two decades. Memorandum of Law in Support of Defendants'
Motion for Partial Summary Judgment ("Def. Mem.") at 3.
In 1996, Enrico Chevallar ("Chevallar"), then-executive vice president
of AST-USA, initiated discussions with Momene about a possible business
relationship between AST-USA and EMS. Id. at 5. In early December 1996,
Chevallar and Momene executed a written agreement whereby "Raphael Momene
EMS Industrial Corporation" was named AST-USA's exclusive sales
representative for Central and South America, id. at 6 and was required
to establish sales offices for AST-USA in Columbia, Peru, and Venezuela,
and AST-USA would defray $3,000 per month for each office. Amd. Cmplt. at
¶ 12. In December 1997, the parties identified as AST-USA and "Raphael
Momene EMS Industrial Corporation," Def. Mem. at 6, entered into a new
agreement which again authorized defendants to act as AST-USA's exclusive
sales representative in South America and Central America. Amd. Cmplt. at
¶ 14. Both the 1996 and 1997 agreements provided that AST-USA would
pay defendants a two percent commission of net sales prices on orders
obtained by defendants. Id. at ¶ 15.
According to AST-USA, from late 1997 through mid-1998, defendants
expressed dissatisfaction with the terms and conditions of the parties'
arrangement, and advised AST-USA that they would resign as AST-USA's
representative unless changes were made. Id. at ¶ 18. By the end of
1998, the relationship between the parties had deteriorated, leading to a
termination of the relationship. Id. at ¶ 19. According to AST-USA,
even after the termination of the relationship, defendants continued to
demand further and additional compensation from it. Id. at ¶¶ 20, 22.
According to defendants, EMS generated numerous orders from Latin
American customers, but AST-USA was unable or
unwilling to fill the
orders in a capable and timely fashion. Def. Mem. at 7. In order to
restore customer confidence, EMS began placing orders with Acciai
Speciali Terni Espana DVD, S.A. ("AST-Spain") pursuant to an agreement
between AST-Spain and "EMS Industrial Corporation." Id. at 10. Although
the business relationship between EMS and AST-USA continued to
deteriorate through 1998, AST-USA sent EMS a contract which Momene signed
and returned, extending their business relationship. Id. at 8. Defendants
maintain that on January 5, 1999, Mario Pecciarini ("Pecciarini"),
Chevallar's replacement as of mid-1997, sent a letter stating that the
parties' agreement was cancelled as of January 1, 1999, and requesting
that Momene "reply via a written notice" of his acceptance. Id. Momene,
however, did not respond. Id. According to defendants, throughout early
1999, EMS and AST-USA continued to exchange correspondences about the
termination of their relationship, and the instant litigation followed.
The instant case was first filed in the New York State Supreme Court,
New York County. An amended complaint was filed on April 11, 2000,
asserting that AST-USA: (I) required a declaratory judgment that the
relationship between the parties terminated as of December 31, 1998; (2)
was entitled to recover the sum of $16,752, which was paid in excess of
commissions owed to defendants; (3) requested that the court permanently
enjoin defendants from further violating their duty to maintain the
confidentiality of proprietary information; (4) reserved the right to
amend the complaint to allege damages incurred as a result of defendants'
diversion of sales; (5) reserved the right to amend the complaint to
allege damages incurred as a result of defendants' breach of duty to not
engage in conduct that was detrimental to AST-USA; (6) was assigned a
claim which the defendants owed to AST-Spain in the amount of
$354,179.95; (7) was assigned a claim which is owed to AST-Spain, based
on thirteen invoices of goods sold and delivered to defendants; (8) was
assigned a claim to an account stated between AST-Spain and the
defendants in the amount of $354,179.95; and (9) was damaged by defendant
Momene, who created EMS as his alter ego to evade liability. Amd. Cmplt.
at ¶¶ 24-60. On April 26, 2000, the case was removed to federal court
and was assigned to Judge Robert W. Sweet.
On March 30, 2001, defendants filed their motion for partial summary
judgment on the first, third, and ninth causes of action pursuant to Rule
56 of the Federal Rules of Civil Procedure. On April 2, 2001, AST-USA
filed its own motion for partial summary judgment on the sixth, seventh,
and eighth causes of action. On October 18, 2001, the parties consented
to transfer all proceedings to the undersigned. 28 U.S.C. § 636(c).
A. Standard for Summary ...