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United States District Court, S.D. New York

February 4, 2004.


The opinion of the court was delivered by: GABRIEL GORENSTEIN, Magistrate Judge


Plaintiff BOSCOV'S Department Stores, LLC ("Boscov's") brought this action against AKS International AA Corp. ("AKS") and its sole shareholder and president, Kalman Strobel, to recover an alleged overpayment of $198,868.00 for repaired jewelry. The defendants subsequently interposed counterclaims based on agreements relating to other jewelry transactions. The parties have consented to disposition of this matter by a United States Magistrate Judge pursuant to 28 U.S.C. § 636(c).

BOSCOV'S has now moved for summary judgment pursuant to Fed.R.Civ.P. 56 with respect to its breach of contract claim in the amount of $198,868.00 and with respect to the counterclaims asserted by AKS and Strobel. See Notice of Motion, filed October 20, 2003. Strobel has cross-moved for summary judgment against BOSCOV'S to dismiss the complaint against him personally. See Notice of Cross-Motion, filed November 14, 2003. For the reasons stated below, BOSCOV'S motion for summary judgment on its breach of contract claim against AKS is granted, BOSCOV'S motion for summary judgment dismissing the counterclaims is denied, Page 2 and Strobel's cross-motion for summary judgment dismissing the claims against him personally is granted.


  This Court has already decided a motion and cross-motion for summary judgment relating to Strobel's personal liability, Boscov's Dep't Stores. LLC v. AKS Int'l AA Corp., 2003 WL 21576405 (S.D.N.Y. July 11, 2003), familiarity with which is assumed. In that decision, summary judgment was granted in favor of Boscov's solely on the issue of whether the promise by Strobel to answer for the debt of AKS was enforceable despite the Statute of Frauds. Id. at *6. Summary judgment was denied in all other respects, including on the ultimate question of Strobel's liability inasmuch as it was unclear from the record whether the conditions Strobel placed on his promise had been met. Id.

  Three issues have been raised in the instant motions: (1) on Boscov's motion, whether AKS is liable for the amount of Boscov's overpayment; (2) on Strobel's cross-motion, whether the conditions placed on Strobel's promise have been met, which would render Strobel personally liable for the amount of overpayment; and (3) on Boscov's motion, whether Boscov's is liable on the defendants' counterclaims. Each is discussed separately.


  Summary judgment may not be granted unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, 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." Fed.R.Civ.P. 56(c): see Celotex Corp. v. Catrett. 477 U.S. 317, 322-23 (1986). A material issue is a "dispute [] over facts that might affect the outcome of the suit under the Page 3 governing law." Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 248 (1986). A genuine issue of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. Thus, "`[a] reasonably disputed, legally essential issue is both genuine and material'" and precludes a finding of summary judgment. McPherson v. Coombe. 174 F.3d 276, 280 (2d Cir. 1999) (quoting Graham v. Henderson. 89 F.3d 75, 79 (2d Cir. 1996)).

  When determining whether a genuine issue of material fact exists, courts must resolve all ambiguities and draw all factual inferences in favor of the nonmoving party. See, e.g., Savino v. City of New York. 331 F.3d 63, 71 (2d Cir. 2003) (citing Anderson. 477 U.S. at 255); McPherson. 174 F.3d at 280. Nonetheless, "mere speculation and conjecture is insufficient to preclude the granting of the motion." Harlen Assocs. v. Incorporated Vill. of Mineola, 273 F.3d 494, 499 (2d Cir. 2001) (citing Western World Ins. Co. v. Stack Oil. Inc., 922 F.2d 118, 121 (2d Cir. 1990)).


  Paragraph 11 of the Complaint alleged that "Boscov's, in error, overpaid AKS by the approximate amount of $198,868.00 for the repair services provided by AKS." Complaint, filed February 21, 2001 ("Complaint") (annexed as Ex. A to Defendants' Rule 56.1 Statement of Material Facts, filed November 14, 2003 ("Def. 56.1")), ¶ 11. Boscov's motion for summary judgment on its claim for breach of contract against AKS is based on its assertion that "Defendants have admitted that Boscov's overpaid AKS $198,868.00." Plaintiff's Statement of Undisputed Material Facts, filed October 20, 2003 ("PL 56.1"), ¶ 7.

  Boscov's is correct that AKS has admitted the allegation in paragraph 11 of the Complaint. In fact, it did so in two distinct ways. First, in the Answer, AKS denied the Page 4 allegations of a number of paragraphs in the Complaint but did not deny the allegations contained in paragraph 11. See Answer with Affirmative Defenses and Counterclaims, dated February 11, 2002 ("Answer") (annexed as Ex. B to Def. 56.1), ¶ 1. Pursuant to Fed.R.Civ.P. 8(d), "[a]verments in a pleading to which a responsive pleading is required . . . are admitted when not denied in the responsive pleading." Defendants now attempt to avoid this conclusion by stating, "Strobel only admitted paragraphs 11 and 16 of the complaint." Def. 56.1 ¶ 10. Insofar as this statement is intended to mean that AKS did not admit paragraph 11, the argument is rejected. The Answer states unequivocally that it was being submitted on behalf of both Strobel and AKS. See Answer at 2.

  Second, AKS admitted the fact of Boscov's overpayment through its failure to controvert Boscov's contention on this point, see PL 56.1 ¶ 7, in AKS's counterstatement required under Local Civil Rule 56.1. See Def. 56.1. Local Civil Rule 56.1(c) provides that "[a]ll material facts set forth in the statement required to be served by the moving party will be deemed to be admitted unless controverted by the statement required to be served by the opposing party."

  Thus, Boscov's is entitled to summary judgment on the issue of whether it overpaid AKS in the amount of $198,868.00 as there is no "genuine issue for trial" on this point, Fed.R.Civ.P. 56(e).


  Strobel has cross-moved for summary judgment on the issue of his own personal liability. Boscov's alleged that Strobel is personally liable for the amount of its overpayment (that is, the $198,868.00) because he promised that "in the event that Boscov's paid the MIG [Manufacturing] invoice and placed an additional order with AKS, Strobel would personally Page 5 ensure that AKS would satisfy the order and Boscov's could deduct the overpayment from the AKS invoice." Complaint ¶ 16. The Court previously found this oral guarantee to be enforceable despite the Statute of Frauds. Boscov's. 2003 WL 21576405, at *6. The Court denied Boscov's cross-motion for summary judgment against Strobel, however, because Boscov's had put forward no evidence as to whether the conditions had been met to trigger Strobel's obligations. Id. Specifically, the record did not indicate whether Boscov's had placed an additional order and whether AKS had fulfilled its obligations to credit Boscov's for the amount of the overpayment.

  In again moving for summary judgment dismissing Boscov's claims against him, Strobel now asserts that "[n]o additional order was placed after the MIG order." Def. 56.1 ¶ 4; accord id ¶ 12. In support of this assertion, Strobel cites to his sworn deposition testimony. See Deposition of Kalman Strobel, September 3, 2003 ("Strobel Dep.") (annexed as Ex. C to Def. 56.1), at 219 ("Q: [A]fter the payment was received [from Boscov's] for [the MIG invoice], did Boscov's place an additional order with AKS? A: No."). Thus, Strobel argues that since the condition precedent to his personal liability was not met, he is not liable and summary judgment must be entered in his favor. See Memorandum of Law in Opposition to Plaintiffs Motion for Summary Judgment and in Support of Defendant's Motion for Summary Judgment, filed November 14, 2003 ("Def. Mem."), at 5-6.

  In response, Boscov's initially argues that Strobel's cross-motion is nothing more than a belated motion for reconsideration and that he should not be allowed to present new facts and arguments with respect to the personal guarantee. Plaintiffs Reply Memorandum of Law in Support of its Motion for Summary Judgment and in Opposition to Defendant's Cross-Motion Page 6 for Summary Judgment, filed November 28, 2003 ("Pl. Reply Mem."), at 7-8. However, the Court has not made any ruling to date on the question of whether the conditions precedent to Strobel's oral guarantee were met. Therefore, Strobel's motion does not address an issue that has already been decided by the Court and thus cannot be treated as a motion for reconsideration.

  Boscov's next line of attack is to dispute Strobel's assertion that Boscov's failed to place an additional order, Def. 56.1 ¶¶ 4, 12. See PL Reply Mem. at 8-9. Boscov's effort, however, is insufficient to defeat the motion for summary judgment for two reasons. First, while Boscov's Rule 56.1 counterstatement disputes Strobel's assertion that no additional order was placed, see Plaintiff's Response to Defendants' Statement of Material Facts, filed November 28, 2003 ("PL Reply 56.1"), ¶¶ 4, 12, Boscov's cites to no admissible evidence to support the assertion, in violation of both Local Civil Rule 56.1 and Fed.R.Civ.P. 56(e). Local Civil Rule 56.1(d) requires Boscov's to provide a "citation to evidence which would be admissible, set forth as required by Federal Rule of Civil Procedure 56(e)." Rule 56(e) requires the submission of "affidavits . . . made on personal knowledge . . .[setting] forth such facts as would be admissible in evidence."

  Boscov's Rule 56.1 counterstatement provides no citation to admissible evidence to support its claim that it placed the required additional order. Instead it refers to a memorandum of law and the documents attached thereto. See PL Reply 56.1 ¶¶ 4, 12. A memorandum of law is of course insufficient to meet Rule 56(e)'s requirements that an "affidavit[]" be supplied, that it be made on "personal knowledge," and that it set forth "admissible" evidence. See, e.g., Dusanenko v. Maloney, 726 F.2d 82, 84 (2d Cir. 1984) (statements in memorandum of law insufficient to defeat summary judgment motion). Page 7

  In addition, even if the Court were to consider the documents attached to the memorandum of law, they would not defeat Strobel's motion. These documents consist of six invoices from AKS dated June 5, 2000, which are bills for certain jewelry shipped to various Boscov's stores. See Invoices, dated June 5, 2000 (annexed as Ex. 1 to PL Reply Mem.). Combined, these six invoices total only $817.15. See id. But there is no evidence that AKS failed to apply a credit for these orders.

  Strobel's promise was that if Boscov's placed a new order, he would personally guarantee that AKS would satisfy the order and that Boscov's could deduct the overpayment from the AKS invoice. Complaint ¶ 16. The condition for Strobel's personal guarantee thus can reasonably be construed only as requiring Strobel to pay Boscov's for any order it subsequently made that went unfulfilled or uncredited by AKS. The existence of invoices does nothing to show that AKS did not meet these obligations.

  Thus, Strobel is entitled to summary judgment because Boscov's has not demonstrated that a genuine issue of material fact exists with respect to whether or not Boscov's placed orders subsequent to Strobel's oral guarantee that went unfulfilled or uncredited, thus triggering Strobel's obligations under that guarantee. Therefore, the claims against Strobel personally are dismissed.


  In their Answer, AKS and Strobel asserted seven counterclaims against Boscov's. Answer ¶¶ 38-76. These claims seem to cover two distinct transactions, neither of which is explained clearly. One transaction appears to be an oral agreement entered in 1996 (hereinafter, the "First Agreement"). Id. ¶ 16. Under the First Agreement, AKS agreed to accept jewelry Page 8 Boscov's was unable to sell and to issue Boscov's credit for the cost, rather than the value, of such jewelry. Id. ¶¶ 16-19, 24-27. In return, Boscov's agreed to immediately offset this credit by purchasing additional merchandise from AKS at inflated prices in order to compensate AKS for the loss incurred in accepting the unsold merchandise. Id. ¶¶ 20-23, 28-31. Defendants also allege the existence of another agreement (hereinafter, the "Second Agreement") entered into — apparently orally — between 1996 and 2000. Id. ¶ 32. Under the Second Agreement, Boscov's agreed to purchase, and AKS agreed to sell, various jewelry products on multiple occasions. Id. 1132-37.

  Defendants allege damages of approximately $635,000.00 based on the First Agreement. Answer ¶ 31. As a result of unpaid or partially unpaid invoices relating to the Second Agreement, defendants allege damages of approximately $405,739.75. Id. ¶ 33.

  In moving for summary judgment on the counterclaims, Boscov's has addressed only the First Agreement. See PL 56.1 ¶¶ 1-6. Boscov's argues that the counterclaims under the First Agreement, Answer ¶¶ 55-73, are barred by a four-year statute of limitations applicable to sales of goods because Strobel knew of Boscov's "alleged breach" of the oral agreement by the end of 1996 and took no action until February 2002 when the counterclaims were asserted. PL 56.1 ¶¶ 4-6; accord Plaintiffs Memorandum of Law in Support of Motion for Summary Judgment Entering Judgment in Favor of Plaintiff and Against Defendants as to All Claims and Counterclaims, filed October 20, 2003, at 5-6. In the alternative, Boscov's argues that the counterclaims under the First Agreement are barred by the Statute of Frauds. Id. at 6-8.

  In response, defendants argue that the counterclaims are not barred by the statute of limitations insofar as they (1) allege fraud rather than breach of contract, and (2) involve Page 9 outstanding invoices dated within four years of Boscov's filing of the complaint — February 21, 2001. Def. Mem. at 3-4. Defendants also argue that the "agreement at issue" was capable of being performed within one year and thus is not barred by the Statute of Frauds. Id. at 4-5. Defendants have not included any facts regarding the agreements underlying the counterclaims in either the 56.1 Statement or memorandum of law. Defendants' arguments do not distinguish between the two apparently separate agreements alleged in the counterclaims.

  Under New York law, an action for breach of contract involving the sale of goods must be commenced within four years of the date the cause of action accrued. N.Y. U.C.C. Law § 2-725(1). The cause of action accrues when the breach occurs. Id. § 2-725(2). For actions based upon fraud, the time limit is six years from the time the fraud was discovered or could have been discovered with reasonable diligence. N.Y. C.P.L.R. § 213(8). With respect to counterclaims, New York law provides that a counterclaim "is not barred if it was not barred at the time the claims asserted in the complaint were interposed." Id. § 203(d). Thus, the timeliness of defendants' counterclaims must be measured from February 21, 2001, the date the claims asserted in the Complaint were interposed.

  As for the counterclaims based strictly on the failure to pay for the goods sold, to which the four-year limitations period applies, there is no evidence in the record as to whether the unpaid invoices are related to or distinct from transactions which occurred pursuant to the First Agreement. From a cursory review of Strobel's most recent deposition testimony, it appears that he is also confused as to this issue and as to the exact amount owed by Boscov's. See, e.g., Strobel Dep. at 147-52, 162-69, 202-09. Certainly, to the extent that the breaches of the parties' agreements occurred after February 21, 1997, those claims will not be barred by the statute of Page 10 limitations. The extent to which claims fall before or after that date, however, will have to be determined at trial as neither side has provided evidence that would allow the Court to make this determination on summary judgment.

  A definitive ruling can be made, however, with respect to the counterclaim alleging fraudulent inducement with respect to the First Agreement, Answer ¶¶ 60-67. The timeliness of such claims extends to any matters arising in the six years prior to February 21, 2001. Because the agreement is alleged to have been made some time in 1996, it obviously falls within the permissible period. Thus, the fraudulent inducement counterclaim is not barred by the statute of limitations.

  With respect to the Statute of Frauds issue, summary judgment must be denied at this time as well. Under New York law, a contract which "[b]y its terms is not to be performed within one year" must be in writing to be enforceable. N.Y. Gen. Oblig. Law § 5-701(a)(1). None of the parties, however, have provided a coherent explanation of the terms of the contracts at issue. It is thus unclear whether the counterclaims involve a series of separate, distinct contracts for the sale of goods that should be evaluated separately to determine the performance period, or whether the counterclaims seek damages arising out of one or more distinct agreements that the parties intended to be performed for a period of longer than one year. Thus, Boscov's is not entitled to a judgment that the agreements are barred by the Statute of Frauds.


  For the foregoing reasons, Boscov's motion for summary judgment against AKS (Docket #33) on the issue of the overpayment is granted. Boscov's motion for summary judgment Page 11 dismissing the counterclaims is denied. Finally, Strobel's cross-motion for summary judgment (Docket #35) is granted and the claims against him personally are dismissed.


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