United States District Court, S.D. New York
February 4, 2004.
BOSCOV'S DEPARTMENT STORES, LLC, Plaintiff, -v- AKS INTERNATIONAL AA CORP. and KALMAN STROBEL, Defendants
The opinion of the court was delivered by: GABRIEL GORENSTEIN, Magistrate Judge
OPINION AND ORDER
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,
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.
II. APPLICABLE LEGAL PRINCIPLES
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
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)).
III. AKS'S LIABILITY FOR THE OVERPAYMENT
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
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).
IV. STROBEL'S PERSONAL LIABILITY
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
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
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
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
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).
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
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.
V. DEFENDANTS' COUNTERCLAIMS
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
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.
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
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
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
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
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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