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United States District Court, Southern District of New York

August 6, 2003


The opinion of the court was delivered by: Denise Cote, District Judge


In this diversity action, the plaintiff Premier Mountings Inc. ("Premier") has brought a partial motion for summary judgment against defendant Clyde Duneier, Inc.("Duneier") to enforce the terms of invoices sent between merchants for the sale of jewelry. The action, which was filed on June 25, 2002, was recently reassigned to this Court. For the following reasons, the motion for summary judgment is granted in part.

The following facts are undisputed. Premier manufactures jewelry. It sold many items to Duneier between September 1999 and 2001. Duneier is one of the country's largest privately owned suppliers of fine jewelry, and is in the business of [ Page 2]

purchasing jewelry for resale. Each shipment was accompanied by an invoice which included the following paragraph:

I/we agree to pay to the order of Premier Mountings Inc., as per the terms mentioned above and an additional service charge of 1.5% per month if full payment is not made within due date. I/we also agree to pay all costs of collection including court costs and attorney's fees. Positively no returns accepted without our authorization. All claims must be made within five days of receipt of goods. 20% restocking charges for returned merchandise without approval.
The invoices also included descriptions of the goods being shipped, the quantity of each item, the price, and a total amount due.

The requirement that any claim regarding the merchandise had to be made within five days was commonly employed within the industry. Duneier's own invoices for its sales included a similar five day claim requirement. Because much of the jewelry in this sector of the industry is custom made, it is expected that buyers will examine the jewelry as soon as it is received and promptly notify the seller of any defects. Duneier never made any written objection to the terms of the invoices within ten days after receiving the invoices.

Duneier made various claims concerning the quality of the goods. Most of the complaints were made weeks or even months after the receipt of the jewelry. Duneier has refused to pay for the jewelry and has returned much of it to Premier without Premier's authorization.

In response to the motion for summary judgment, the defendant did not file any counter statement to plaintiff's Rule 56.1 Statement, or any memorandum of law. Given this failure, the assertions in the plaintiff's Rule 56.1 Statement are [ Page 3]

accepted as true. See Local Rule 56.1(c); Gubitso v. Kapica, 154 F.3d 30, 31 n. 1 (2d Cir. 1998) (court "accept[ed] as true the material facts contained in defendants Local Rule 3(g) statement because plaintiff failed to file a response").

The defendant relies on a declaration from his attorney and from its President. The affidavit from an attorney is not admissible evidence. See Wyler v. United States, 725 F.2d 156, 160 (2d Cir. 1983); Omnipoint Communs., Inc. v. Common Council of Peekskill, 202 F. Supp.2d 210, 213 (S.D.N.Y. 2002). Through its President's affidavit, Duneier principally argues that industry practice does not require return of jewelry within five days, despite the terms of the invoice. It argues that many of the items received from Premier were defective or delivered late, or both. It attributes the delay in returning many of the goods to Premier to the fact that they had to be retrieved from Duneier's customers.

The documents that Duneier has submitted in opposition to this motion illustrate the delay in returns to Premier. For example, the very first document it has submitted reflects an order on September 22, 2000, of 85 pieces of jewelry from Premier, and then a return to Premier over seven months later, on May 3, 2001 of 47 pieces.

Duneier has also submitted a schedule of the returns it made to Premier. The document has not been properly authenticated. Nonetheless, it reflects returns within just a few days for receipt of shipments that were in most instances made between March 27, 2001 and April 14, 2001. There is no indication in this schedule that the goods received before March 27, 2001, were [ Page 4]

ever returned within a reasonable period of their receipt. Finally, Duneier has offered two e-mail messages from Premier in May 2001, concerning deficiencies in the jewelry and a desire to improve.


Summary judgment may not be granted unless the submissions of the parties taken together "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), Fed.R.Civ.P. The moving party bears the burden of demonstrating the absence of a material factual question, and in making this determination the Court must view all facts in the light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Celotex Corp v. Catrett, 477 U.S. 317, 323 (1986). When the moving party has asserted facts showing that the non-movant's claims cannot be sustained, the opposing party must "set forth specific facts showing that there is a genuine issue for trial," and cannot rest on the "mere allegations or denials" of his pleadings. Rule 56(e), Fed.R. Civ. P.; accord Burt Rigid Box, Inc. v. Travelers Property Cas. Corp., 302 F.3d 83, 91 (2d Cir. 2002). Thus, in determining whether to grant summary judgment, this Court must (1) determine whether a genuine factual dispute exists based on evidence in the record; and (2) determine, based on the substantive law at issue, whether the fact in dispute is material.

Both parties rely on New York law, thus implying their agreement that New York law should apply. In a diversity action such as this, the choice of law rules of the forum state [ Page 5]

apply. See Klaxon Co. v. Stentr Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941). "In the absence of a strong countervailing public policy, the parties to litigation may consent by their conduct to the law to be applied." Mentor Ins. Co. v. Brannkasse, 996 F.2d 506, 513 (2d Cir. 1993) (quoting Walter E. Heller & Co. v. Video Innovations, Inc., 730 F.2d 50, 52 (2d Cir. 1984) (collecting cases)). Here, because the parties have relied on New York law, the critical events in this action — including the rejection of goods that serves as the basis of plaintiff's claims — occurred in New York, and no countervailing policy cautions against the application of New York law, the Court will apply New York law.

Section 2-201(1) of the New York Uniform Commercial Code, N.Y. U.C.C. § 2-201(1), which is the Statute of Frauds provision, requires a writing sufficient to indicate the existence of a contract for any sale of goods for $500 or more. The writing must be signed by the party against whom enforcement is sought. N.Y. U.C.C. § 2-201(1). There is a "merchants exception" to the Statute of Frauds.

Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within ten days after it is received.
N.Y. U.C.C. Law § 2-201(2).

Invoices that are sent to the seller and that are retained without objection may fall within the merchants exception. Bazak Int'l Corp. v. Mast Indus., Inc., 73 N.Y.2d 113, 116 (1989). Whether a document is sufficient to satisfy the Statute of Frauds must be "determined from the documents themselves" and [ Page 6]

without reference to parole evidence. Id. at 118. The writing "must satisfy the test articulated in U.C.C. 2-201(1) that it be `sufficient to indicate that a contract for sale has been made.'" Id. at 122. If it contains such an indication, then the recipient is obliged "to make written objection where there is an intent to disavow it." Id.; see also Apex Oil Co. v. Vanguard Oil & Serv. Co., 760 F.2d 417, 423 (2d Cir. 1985); B&R Textile Corp. v. Domino Textiles, Inc., 430 N.Y.S.2d 89, 90 (1st Dept. 1980).

When it is established that a writing is sufficient to satisfy the Statute of Frauds, a plaintiff must still carry its "burden of proving the alleged agreement for the sale." Bazak, 73 N.Y.2d at 118. The burden includes the burden of proving that a contract was indeed made and the burden of proving the terms of the contract. Id. at 122. Conversely, the defendant may show that no contract was made, or that it differed in its terms from the one claimed by the plaintiff. Id. (citing U.C.C. § 2-201, official comment 3).

Where it is established that a term of the contract required rejection or revocation within a specified period of time, a seller is entitled to judgment as a matter of law when it is undisputed that the rejection or revocation did not occur within the specified time. Anchor Fish Corp. v. Torry Harris, Inc., 135 F.3d 856, 859 (2d Cir. 1998) (collecting cases). Even without such a term to a contract, any rejection of goods must be made within a reasonable time after receipt.

Under the U.C.C., any rejection of goods must be "within a reasonable time after their delivery or tender. It is [ Page 7]

ineffective unless the buyer seasonably notifies the seller." U.C.C. § 2-602(1). If good are accepted, the buyer "must pay at the contract rate." U.C.C. § 2-607(1). An acceptance of the goods "precludes rejection of the goods accepted and if made with knowledge of a non-conformity cannot be revoked because of it unless the acceptance was on the reasonable assumption that the non-conformity would be seasonable cured." U.C.C. § 2-607(2). Similarly, where a tender of goods has been accepted, a "buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy." U.C.C. § 2-607(3)(a). Finally, any revocation of an acceptance of goods, "must occur within a reasonable time after the buyer discovers or should have discovered the ground for it." U.C.C. § 2-608(2).

There is no dispute that the plaintiff and defendant are merchants, that the invoices were sent within a reasonable time after the alleged agreement, that they were received by someone with reason to know of their contents, that no written objection was made to the invoices within ten days, and that the invoices are sufficient to indicate the existence of an agreement. See Bazak, 73 N.Y.2d at 123. The plaintiff is therefore entitled to summary judgment on the issue that the invoices reflect a contract between the parties.

The parties dispute only two terms of the contract. They dispute whether all claims had to be made within five days and whether no returns could be made without authorization. Duneier presents evidence through its President's affidavit that the five day claim policy was not the custom between these parties or [ Page 8]

within the industry in which they worked. This evidence is sufficient to raise a question of fact regarding that term of the contract. The President of Duneier also asserts that both parties have accepted goods on occasion when they were returned beyond the five day period. That evidence is not sufficient, however, to raise a question of fact regarding the contract's requirement that any return cannot be made without authorization. The fact that the seller has chosen on occasion, or even frequently, to allow returns does not mean that the seller does not also retain the power to refuse to accept the returns.

Since the defendant has raised a question of fact regarding the five day claim policy in the contract, the plaintiff is only entitled to summary judgment where the defendant's claims regarding the goods were not made within the reasonable time required by the U.C.C. The defendant cannot escape the obligations of the contract by asserting that goods were delivered late or were defective unless he provided timely notice of the deficiency to the plaintiff.

In S&H Bldg. Material Corp. v. Benny Riven, 574 N.Y.S.2d 798 (2d Dept. 1991), the invoice required the defendant to notify the plaintiff in writing within 48 hours if the delivered materials did not conform to the descriptions in the invoice, or if there was any discrepancy or breach of warranty. Id. at 799. If there were no notice, the invoice provided that the materials that were delivered would be considered to be in conformity with the descriptions in the invoice and warranties. The court granted summary judgment to the plaintiff, rejecting the defendant's untimely complaint that the goods were defective. It held that [ Page 9]

"[i]n view of the notice provisions of the agreement and the invoices," a written notification of defects that came with the answer to the complaint and was served some eight and one-half months after the last delivery of materials was too late. Id. at 800.

The plaintiff has shown that it is entitled to summary judgment for all jewelry shipped pursuant to invoices dated before March 27, 2001, and for those invoices dated March 27, 2001, and thereafter, where the defendant has not shown in connection with this summary judgment motion that it returned the jewelry to Premier within ten days of receipt. With respect to those items received with an invoice dated March 27, 2001, or later, and returned to Premier within ten days of receipt, the parties may present evidence at trial as to whether Premier authorized the return.


The plaintiff's motion for partial summary judgment on its contract claim is granted in part. A scheduling order for further proceedings in this case is being issued in connection with this Opinion and Order.

SO ORDERED [ Page 1]


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