United States District Court, S.D. New York
April 23, 2004.
AMERICAN EQUITIES GROUP, INC., Plaintiff, -against- AHAVA DAIRY PRODUCTS CORP., LEWIS COUNTY DAIRY CORP., and MOISE BANAYAN, Defendants
The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge
Plaintiff American Equities Group, Inc. ("AEG") and defendants Ahava
Dairy Products Corporation ("Ahava"), Lewis County Dairy Corporation
("Lewis County Dairy"), Ahava Food Corporation ("AFC") and Moise Banayan
("Banayan") have each moved for summary judgment pursuant to Federal Rule
of Civil Procedure 56(b). For the reasons set forth below, both motions
AEG is a corporation organized and existing pursuant to the laws of the
State of New York. Its current principal place of business is in New
York, as it was when AEG filed a voluntary petition for bankruptcy on
November 21, 2000. When AEG commenced contractual relations with Ahava,
its principal place of business was in Wayne, New Jersey. AEG does
business as a financial services company engaged principally in the
business of accounts receivable factoring.
Ahava is a corporation organized and existing pursuant to the laws of
the State of New York, with its principal place of business in Brooklyn,
New York, engaged in the sale of dairy products. Lewis County Dairy is a corporation organized and existing pursuant to
the laws of the State of New York, with its principal place of business
in the Lowville, New York.
AFC is a corporation organized and existing pursuant to the laws of the
State of New York, with its principal place of business in Brooklyn, New
Banayan is a resident of the State of New York, and is President of
Ahava, Lewis Dairy and AFC.
On November 21, 2000, AEG filed a voluntary petition for relief under
Chapter 11, Title 11, United States Code (the "Bankruptcy Code") and is
continuing to operate its business and manage its property as a
On April 17, 2001, AEG commenced an adversary proceeding against Ahava,
Lewis County Dairy and Banayan to recover an account balance of over $8
million arising out of a Master Purchase & Sale Agreement of November
6, 1996 (the "Agreement") to provide factoring of Ahava's accounts. A
factoring agreement is an "agreement to convert receivables into cash by
selling them at a discount." E. Armata Bank, Inc. v. Korea
Commercial Bank of New York, 361 F.3d 100, 110 (2d Cir. 2004) (internal
On September 27, 2001, the motion by defendants to withdraw the
adversary proceeding in Bankruptcy Court was granted, and defendants'
motion to transfer this case to the District of New Jersey was denied.
See American Equities Group, Inc. v. Ahava Dairy Products
Corp., 01 Civ. 5207, 2001 WL 1143188 (S.D.N.Y. Sept. 27, 2001).
Following discovery, both plaintiff and defendants filed simultaneous
motions for summary judgment on January 12, 2004. After submission of
briefs, oral argument was heard on the motions on February 11, 2004, at
which time the motions were deemed fully submitted.
The following facts are taken from the parties' Rule 56.1 statements,
the responses to those statements, and the briefs. Factual disputes are
noted. As required, the facts are construed in the light most favorable
to the non-movant, as applicable. They do not constitute findings of fact
by the Court.
Other than the actual wording of the relevant contracts, virtually
every aspect of the relationship between the parties is disputed. AEG contends that the Agreement was generally followed
properly by both parties, except that Ahava fell behind on its
obligations to AEG, ultimately owing AEG millions of dollars. Ahava, by
contrast, argues that the Agreement was not followed from the start, and
resembled not a factoring agreement but a criminally usurious loan.
As mentioned above, the parties entered into the Agreement on November
6, 1996. The Agreement specifies that it, along with
all transactions occurring hereunder shall be
deemed made in and governed by and construed in
accordance with the laws of the State of New
Jersey, except as to the application of the New
York Uniform Commercial Code, without regard to
the principles of conflict of law.
Agreement, ¶ 9 (in all capitals in original). The Agreement
also contains a provision waiving any right Ahava may have to a jury
trial. Id., ¶ 10. On the same date, Lewis County Dairy and
Banayan executed an absolute and unconditional guaranty (the "Guaranty")
of payment for all of Ahava's contractual obligations under the
The Agreement provided that AEG would purchase the account receivables
of Ahava and advance Ahava, pursuant to a formula set forth in the
Agreement, 55% to 75% of the net outstanding value of the receivables, less any management, service,
discount and overdraft fees.
Immediately following the signing of the Agreement, the parties
executed a supplemental letter agreement (the "Letter Agreement"). The
Letter Agreement permitted Ahava "to collect any amounts owed by
customers whether prepay, COD or payments on account and to deposit said
moneys in a bank account designated and owned solely by AEG (the "AEG
Collection Account')." Further, Ahava agreed "to provide its reasonable
commercial best efforts in collecting, excluding litigation, and
depositing promptly into the AEG Collection Account all outstanding
Pursuant to the Letter Agreement, Ahava did its own collections of
receivables from its customer and deposited the proceeds into a bank
account at Republic Bank maintained under the exclusive control of AEG
(the "DBA Account"). Ahava could not make any withdrawals out of the DBA
Account. Ahava would report the information about the account receivables
it had collected in a regular or weekly submission of customer sales
reports. AEG contends that the receivables were purchased by AEG pursuant
to the Agreement, that the purchase of a group of receivables was
referred to as a "pool," and that AEG subsequently advanced funds to
Ahava based on the purchasing of the account receivable pools. Ahava disputes this account, referring to the advance of funds by AEG as
a loan, and contending that the pools were held by AEG as collateral.
According to AEG, however, it did loan Ahava additional monies via credit
line arrangements and term loan arrangements, but those began some time
in 1998 and continued through December 2000.
The Agreement's initial term expired on November 6, 1997. AEG contends
that the term expired with a balance due of over $4 million. Ahava
contends that the numbers are drawn from the Summary of Ahava's Account,
which is an inaccurate document. AEG and Ahava agreed to continue their
contractual relationship and to extend the Agreement through November
2000. AEG contends that from November 1997 through November 2000, the
parties continued their contractual relationship in accordance with the
terms of the Agreement. During this time, AEG claims that it advanced
millions of dollars to Ahava, and that Ahava was obligated to continue
depositing its collected accounts receivables and related fees into a
collection account set up by Ahava for the benefit of AEG. Ahava denies
this, stating that the terms of the Agreement were not followed from the
AEG contends that it performed its obligations under the Agreement, but
that Ahava fell behind on its payment obligations. Ahava denies that it
fell behind on its payment obligations, and contends that AEG failed to
perform its obligations under the Agreement. AEG contends that at no time prior to the commencement
of this litigation did Ahava give notice of non-acceptance of any of the
advanced monies or dispute the money or fees assessed to Ahava.
According to AEG, by December 2000 Ahava breached its payment
obligations under the Agreement by failing to deposit all of the account
receivables it collected into the collection account, leaving an
outstanding balance due to AEG of over $8 million. AEG alleges that in
total, Ahava paid only $35,271,338 of the $43,353,157 owed to AEG. AEG
states that as of late 2000 Ahava has made no payments to AEG on the
outstanding balance. Ahava disputes this, stating that there was no
funding to Ahava from AEG in 2000, and thus no obligation to pay AEG.
Further, Ahava alleges that the Book Account is an unreliable document,
and that approximately $8.7 million of payments by Ahava were not
On December 20, 2000, pursuant to the Agreement, AEG gave notice of
default to Ahava. Ahava acknowledges receiving the default notice from
AEG, but denies that it was sent pursuant to the Agreement, because it
denies that it owed AEG anything.
AEG states that it was advised by Ahava that it was unwilling to pay
its outstanding payment obligations under the Agreement and that Ahava
would shortly no longer be in business. AEG also alleges that Ahava is
undercapitalized, as that term is generally construed. Ahava argues that these statements are
inadmissible under Fed.R. Evidence 408 because they were made in the
context of settlement negotiations.
AEG states, and Ahava does not deny, that at no time prior to the
commencement of this lawsuit did Ahava give notice of non-acceptance of
any of the monies advanced to Ahava.
Ahava's Alleged Alter Egos
AEG claims that Ahava, Lewis County Dairy and AFC are alter egos of
each other, and that Ahava and AFC share the same (i) post office boxes,
(ii) office space, (iii) telephone and facsimile numbers, (iv) officers,
directors and personnel; (v) customers; and (vi) plant and equipment.
Ahava disputes this and states that Ahava and AFC have different post
office boxes, offices, and telephone and facsimile numbers.
As to the shareholders, Ahava states that when AFC was formed in 1999,
Banayan, Ruben Beityakov, Farrojollah Banayan, and Yossi Banayan were
each 25% shareholders. Later, after AFC received a $7.1 million loan from
New York City's Economic Development Corporation ("EDC"), Banayan was
forced to take a second and third mortgage on his home in order to
support AFC, which none of the other shareholders were willing to do.
Banayan thereby became AFC's sole shareholder. AFC's funding comes virtually exclusively from EDC, and AFC did not use any of Ahava's
assets as seed money.
Ahava also states that while Ahava never employed more than 31 people,
AFC employs nearly 60 people. Ahava also states that the customers of
Ahava and AFC are not the same. Ahava distributed only dairy products,
while AFC distributes a variety of Israeli salads, Canadian juices,
imported cheeses, meats and fish.
AFC's customer base is larger and more diverse than Ahava's. Ahava
notes that AFC has made millions of dollars in purchases of food products
from various companies, while Ahava makes no purchases from those
companies. Finally, Ahava and AFC distribute their products from
different Brooklyn locations.
AEG alleges that Ahava receives and has received payment from customers
for amounts owed under invoices sent by AFC. Ahava disputes this,
although it acknowledges that years ago, monies due and owing were
occasionally sent to AFC. Ahava maintains that this was a rare occurrence
which has not been repeated in years.
AEG also claims that Ahava and AFC have intermingled corporate funds
and have not maintained or observed corporate formalities. Ahava denies
that funds were ever intermingled. Ahava also notes that in addition to
the differences already listed, the two entities have different banking
relationships. Ahava did its banking at Republic Bank and later HSBC and
the Bank of Utica, while AFC banks at Commerce Bank and Staten Island Bank.
Further, Ahava only functioned as a distributorship, while AFC is also a
AEG alleges that on or about July 1, 2000, AFC assumed from Ahava Dairy
the exclusive right to distribute the products of Lewis County Dairy,
without giving an explanation or notice to AEG. Ahava denies that either
Ahava or AFC ever had the right to be an exclusive distributor of Lewis
County Dairy. Ahava further states that AFC never took over any business
AEG states, and Ahava does not deny, that Ahava, AFC and Lewis County
Dairy all use the same accountant, and that Lewis County Dairy and
Banayan guaranteed Ahava's obligations to AEG.
Ahava contends that AEG never examined Ahava's receivables, never
investigated Ahava's customers, did no credit checks of Ahava's customers
and had no contact with them. AEG contends that AEG attempted for months
to access Ahava's clients and to get financial information from Ahava,
but that Ahava refused to allow AEG to contact Ahava's customers. AEG
also contends that while AEG agreed to let Ahava make the calls to its
customers, AEG maintained control of the collections. Ahava alleges that AEG assessed fees against Ahava whether or not
receivables were purchased. AEG disputes this, contending that it
assessed fees according to the terms of the Agreement. AEG was entitled
to the following fees: 2% discount fee of the face value of the
receivable pool purchased;.80% to 1.5% service fee (depending on initial
receivable value) of the face value of the receivable pool purchase;.50%
penalty fee of the outstanding receivables at 90 days from the
establishment of the receivable pool; and 18% per annum interest on any
daily overdraft position in the book account.
Ahava alleges that Initial Receivable Values ("IRVs") were never set by
Ahava and were established solely by AEG. AEG does not directly dispute
this, noting only that AEG purchased account receivables from Ahava based
on a formula set forth in the Agreement, which took into account the
outstanding value of the receivables. AEG does not specify how the value
of these receivables was assessed.
Ahava also alleges that AEG reduced IRVs below that 55% level set forth
in the Agreement, and that although the levels were below that permitted
in the Agreement, the services were not correspondingly lowered. AEG
disputes this, and contends that the tables prepared by Ahava to
demonstrate this allegation are misleading, as they do not reflect the
fact that uncollected accounts receivable pools were replaced with new
accounts receivable pools from Ahava. A portion of the receivables which are
identified in the tables that Ahava has provided to illustrate improperly
valued IRVs are "simply additional accounts receivable factored as
collateral to replace past uncollected receivables." Affidavit of Susan
Henry ("Henry Aff."), ¶ 14(c). Ahava also alleges that fees were
charged by AEG even when no money was advanced. AEG disputes this by
noting that account receivables not paid within 90 days were subject to
penalty fees and annual interest under the Agreement.
Ahava alleges that AEG improperly charged fees based on the gross
receivables it "batched," although Ahava does not explain what this means
or why it is improper. Ahava also alleges that AEG charged fees based on
receivables that it arbitrarily declared to be Client Risk Receivables.
In response, AEG argues that Ahava has failed to acknowledge that
according the Agreement, fees are to be calculated based on the gross
Ahava further alleges that AEG charged fees on cash sales. AEG does not
directly dispute this, but refers to the Letter Agreement, according to
which AEG was not permitted to charge fees on COD or prepay amounts.
However, a payment will be considered COD or prepaid only if the customer
has no outstanding indebtedness to AEG or Ahava. Perhaps most importantly, Ahava alleges that the Book Account did not
accurately reflect the monies transferring hands between the parties.
Ahava charges that deposits made by Ahava into the DBA Account were not
posted in the Book Account on the day that they were deposited. AEG
disputes this characterization. AEG states that in the first month or two
of the relationship between the parties, Ahava had not provided complete
and timely information to AEG, and as a result collected funds were not
posted promptly to the Book Account. However, AEG states that Ahava was
charged no interest fees or interest because of this delay. After the
initial period, AEG states that it would provide Ahava with credit for
cleared funds. Further, AEG notes that Ahava received credit only for
cleared funds after first subtracting any adjustments for returned checks
and related bank charges.
Ahava alleges that if the fees recorded in the Book Account are
considered to be interest, AEG charged an effective interest rate in
excess of 25% and at times approaching 1000%. AEG disputes this, arguing
that Ahava calculates numerous imputed interest rates based on a skewed
sample of pools and not on the entirety of the transactions in the Book
Account. AEG maintains that the amounts charged to Ahava over the entire
course of their relationship did not exceed 24.54% per annum, including
all interest and fees charged. If overdraft interest and penalty fees
charged to Ahava are excluded, AEG argues that the effective interest
rate would be 16.75%. Ahava also alleges that IRV levels both declined below and rose above
the levels contemplated in the Agreement. AEG disputes this
characterization, arguing that the tables prepared by Ahava fail
accurately to account for remittances that are properly applied to
factored receivables within the Book Account. Ahava raises several
related allegations as to the disparities between the remittances
received and the IRV. In each case, AEG disputes that such disparities
exist, and argues that Ahava has provided misleading figures.
Ahava claims that the Book Account fails to record approximately
$8,000,000 of payments made by Ahava to AEG, as reflected in the bank
statements for the DBA Account. According to AEG, in November 1999, AEG
and Ahava agreed to transfer the money deposited into the AEG collection
back to Ahava's bank account on the same day minus $2,500 to AEG as
collections. Over the course of their relationship, the amount
transferred back to Ahava totals approximately $8,000,000, according to
Ahava also claims that over $900,000 was recorded in the Book Account
as having been transferred by AEG to Ahava, but there is no corresponding
entry in Ahava's bank statement. AEG counters that the amount was
$821,000, and that AEG forwarded that amount on November 6, 1996, at
AEG's direction, to its prior factor to pay off an outstanding invoice
that Ahava owed to them. Further, AEG states that Ahava instructed AEG to pay $24,400 directly to Mark's
Dairy the next day.
Ahava claims that the difference between the amount advanced to Ahava
according to the Book Account and the amount that should have been
advanced according to the Agreement exceeds $13 million. AEG disputes
this figure, arguing that Ahava has improperly based the amount due to
Ahava on the gross receivables, rather than the "factor risk," as
specified in the Agreement.
Ahava argues that it was charged $70,335 for the issuance of only two
letters of credit. AEG conversely argues that several letters of credit
were provided to Ahava throughout the contractual relationship.
Ahava further claims that the Book Account fixed the service fee
throughout at 1.5%, irrespective of the IRV. The application of an
incorrect service fee occurred in 290 pools of receivables, representing
purchases of over $40 million. Ahava also alleges that AEG improperly
charged fees on 220 pools of Client Risk Receivables, representing over
$17 million in receivables. AEG disputes these charges as well, arguing
Ahava's figures are misleading, and that the service and discount fees
should be based on the gross receivable value of the accounts receivable,
as indicated in the Agreement. Ahava claims that Banayan complained to AEG's CEO David Goldberg
("Goldberg") as early as 1997 that the effective interest rate being
charged to Ahava was approximately 50%. According to Ahava, Goldberg
wrote back to Banayan, stating that the cost of funding was not 50%, and
did not exceed 33.05%. AEG disputes this, stating that at no time prior
to the commencement of this lawsuit did Ahava give notice of its
non-acceptance of any of the advanced monies, nor did it dispute the
money or fees assessed to Ahava. According to AEG, up until December
2000, Ahava was paying AEG in accordance with the Agreement. AEG alleges
that it was only after AEG had advanced Ahava millions of dollars that
Ahava refused to pay the outstanding balance and fees owed to AEG under
the Agreement. In the letter from Goldberg to Banayan, Goldberg objected
to the method by which Banayan was calculating interest.
Ahava claims that despite numerous requests from Ahava, AEG did not
provide any payoff letter for Ahava. AEG disputes this, stating that AEG
provided a payoff amount to Ahava every month in the reports that were
sent to Ahava. Further, AEG provided a special report to Ahava whenever
Ahava requested a payoff amount before the monthly report was sent to
New York Law Applies to AEG's Claims against Defendants
The Agreement states that it is to be governed in accordance with "the
laws of the State of New Jersey, except as to the application of the New York Uniform Commercial Code, without
regard to the principles of conflict of law." In a previous opinion in
this case, it was noted that "the choice of law clause likely mandates
the application of New Jersey law," American Equities, 2001 WL
1143188, at *4, although the issue was not decided at that time. Ahava
argues that New York law should apply. The choice of law may be
significant for Ahava's defense of usury because "New York's maximum rate
of interest of 25% is half of New Jersey's permissible interest rate."
In re McCorhill Pub., Inc., 86 B.R. 783, 793 (Bankr. S.D.N.Y.
A bankruptcy court hearing claims that are based upon state law and
that do not implicate a significant federal interest must apply the
choice of law rules of the forum state, here the State of New York.
See In re Gaston & Snow, 243 F.3d 599, 605-07(2d Cir.
2001); see also In re PSINet, Inc., 268 B.R. 358, 376 (Bankr.
Although New York recognizes the "choice of law principle that parties
to a contract have a right to choose the law to be applied to their
contract, this freedom of choice on the part of the parties is not
absolute." S. Leo Harmonav, Inc. v. Binks Mfg. Co., 597 F. Supp. 1014, 1025 (S.D.N.Y. 1984),
aff'd 762 F.2d 990 (2d Cir. 1985) (internal citation omitted).
To determine the appropriateness of the parties' choice of law, New York
follows the "substantial relationship" approach, as stated in Restatement
(Second) of Conflicts of Law § 187:
(2) The law of the state chosen by the parties to
govern their contractual rights and duties will be
applied . . . unless either
(a) the chosen state has no substantial
relationship to the parties . . . or
(b) application of the law of the chosen state
would be contrary to a fundamental policy of a
state which has a materially greater interest
than the chosen state . . .
See Leo Harmonay, 597 F. Supp. at 1025; see also
Levine v. Arabian American Oil Co., 84 Civ. 2396, 1985 WL 3945, at
*3-*4 (S.D.N.Y. Nov. 27, 1985); Southern Int'l Sales. Co. v. Potter
& Brumfield Division, 410 F. Supp. 1339, 1342-43 (S.D.N.Y. 1976)
"The New York Court of Appeals has addressed the `substantial
relationship' approach and held that while the parties' choice of law is
to be given `heavy weight,' the law of the state with the `most
significant contacts' is to be applied." Agricultural Ins. Co., Inc.
v. Ace Hardware Corp., 98 Civ. 8708, 2003 WL 164272, at *5 (S.D.N.Y.
Jan. 17, 2003) (quoting Haag v. Barnes, 9 N.Y.2d 554, 559-60,
216 N.Y.S.2d 65, 175 N.E.2d 441 (1961)); see also Cargill, Inc. v. Charles Kowsky Resources,
Inc., 949 F.2d 51, 55 (2d Cir. 1991) ("New York law allows a court
to disregard the parties' choice when the `most significant contacts' are
in another state.") (quoting Haag); Walter E. Heller &
Co. v. Video Innovations, Inc., 730 F.2d 50, 52 (2d Cir. 1984)
It is undisputed that the Agreement was negotiated in New York; it was
signed by Ahava in New York; all performance there-under was in New
York, including the deposit of money into the AEG controlled bank account
located in New York. Further, both Ahava and AEG are incorporated in New
York. Ahava's principal place of business is in New York. AEG's place of
business, now and at the time it filed for bankruptcy is in New York.
However, when AEG and Ahava executed the Agreement, AEG's principal place
of business was in New Jersey. That, however, is the only significant
contact of the parties with New Jersey, apart from the fact that the
Agreement was delivered to AEG in New Jersey. Under these circumstances,
has no substantial relationship to the parties and
New York would seem to have a materially greater
interest in the application of its law. In light
of the foregoing, the rights and duties of the
parties are governed by the law of New York,
despite the `agreement' of the parties to the
Leo Harmonay, 597 F. Supp. at 1025. In addition, "New
York has a strong public policy against interest rates which exceed 25%,
which policy must be enforced." In re McCorhill, 86 B.R. at 793
(citing North American Bank, Ltd, v. Schulman, 123 Misc.2d 516,
474 N.Y.S.2d 383 (N.Y. Co. Ct. 1984)).
AEG argues that New Jersey law should apply to Ahava's usury defense
under New York's so-called "rule of validation." Under that rule, "the
forum state chooses the state whose usury statute would sustain the
contract in full or else impose the lightest penalty for usury from the
set of all states that have a substantial relationship to the contract."
Walter E. Heller & Co. v. Chopp-Wincraft Printing Specialties,
Inc., 587 F. Supp. 557, 560 (S.D.N.Y. 1982) (citing Speare v.
Consolidated Assets Corp., 367 F.2d 208 (2d Cir. 1966)). The rule of
validation has, however, been disapproved by New York courts subsequent
to the Chopp-Wincraft decision. In A. Conner General
Contracting Inc. v. Rols Capital Co., 145 A.D.2d 452, 535 N.Y.S.2d 420
(2d Dep't 1988), the Second Department held:
New York's present choice-of-law rule, dubbed the
center of gravity approach is that the law of the
State having the most significant contacts with
the matter in dispute will be applied even where
the matter in dispute is usury. The Federal courts
have held by way of dicta that New York follows
the rule of validation [citing
Chopp-Wincraft and Speare]and
approval of that rule has occasionally been
expressed by New York courts. However, the Court
of Appeals has not articulated a special rule for
usury cases. Rather, it appears to remain that
"the law of the jurisdiction having the greatest
interest in the litigation will be applied and
that the facts or contacts which obtain
significance in defining State interests are those
which relate to the purpose of the particular law
in conflict." 145 A.D.2d at 453 (quoting Miller v. Miller, 22 N.Y.2d 12,
290 N.Y.S.2d 734, 237 N.E.2d 877 (1968)) (internal citations
omitted); accord Industrial Development Bank of Israel, Ltd. v.
Bier, 149 Misc.2d 797, 804, 565 N.Y.S.2d 980, 984 (Sup.Ct., N.Y.
Co. 1991), aff'd 182 A.D.2d 570, 582 N.Y.S.2d 429 (1st Dep't
1992); see also In re Chateaugay Corp., 150 B.R. 529, 540 n.13
(Bankr. S.D.N.Y. 1993) ("it appears far from settled that New York courts
apply the `rule of validation' even in usury cases."). While this Court
applied the rule of validation following the publication of the A.
Conner decision, see Superior Funding Corp. v. Big Apple
Capital Corp., 738 F. Supp. 1468, 1471 (S.D.N.Y. 1990), it did so
without considering the Second Department's ruling.
Because New York is the state with the most significant contacts to the
parties in the context of the Agreement, and because the rule of
validation is not the law of the jurisdiction, New York law will apply to
the claims made by AEG against Ahava.
The Book Account is Admissible as a Business Record
Ahava argues that the Book Account, which is one of the crucial
documents relied on by AEG in order to establish its claims against
Ahava, is inadmissible as it does not qualify as a business record under
Fed.R.Evid. 803(6). Rule 803(6) provides an exception to the rule
excluding hearsay. It provides, in part, for the admission of any memorandum, report, record, or data compilation,
in any form, of acts, events, conditions, opinions
or diagnoses, made at or near the time by, or from
information transmitted by, a person with
knowledge, if kept in the course of a regularly
conducted business activity, and if it was the
regular practice of that business activity to make
the memorandum, report, record, or data
compilation, all as shown by the testimony of the
custodian or other qualified witness . . . unless
the source of information or the method or
circumstances of preparation indicate lack of
The "principal precondition to admission of documents as business
records pursuant to Fed.R.Evid. 803(6) is that the records have
sufficient indicia of trustworthiness to be considered reliable."
Potamkin Cadillac Corp. v. B.R.I. Coverage Corp., 38 F.3d 627,
632 (2d Cir. 1994) (quoting Saks Int'l, Inc. v. M/V Export
Champion, 817 F.2d 1011, 1013 (2d Cir. 1987)). The Second Circuit
has stated that Rule 803(6) "favors the admission of evidence rather than
its exclusion if it has any probative value at all." United States
v. Williams, 205 F.3d 23, 34 (2d Cir. 2000) (quoting In re
Ollag Constr. Equip. Corp., 665 F.2d 43, 46 (2d Cir. 1981)).
Ahava argues that the Book Account is inadmissible because of a lack of
foundation. Ahava contends that AEG is unable to show that the record was
made by an individual with personal knowledge. In particular, Ahava
alleges that Sam Awar ("Awar"), AEG's former Director of Operations,
could not name the particular person who was responsible for making
entries in the Book Account, and that no single person was responsible
for data entry. AEG has put forward Awar and Jack Sandier ("Sandier"),
AEG's former Controller, as the "custodian[s] or other qualified witness[es]"
who have testified that the Book Account was "kept in the course of a
regularly conducted business activity." The "`custodian need not have
personal knowledge of the actual creation of the document' to lay a
proper foundation . . . Nor is there any requirement under Rule 803(6)
that the records be prepared by the party who has custody of the
documents and seeks to introduce them into evidence." Phoenix
Associates III v. Stone, 60 F.3d 95, 101 (2d Cir. 1995) (quoting 4
Weinstein's Evidence, at 803-201-04). In Phoenix,
the Second Circuit therefore rejected the argument that the failure of
the custodian "to identify the specific employee responsible for filling
out the record proved fatal to its foundation." Id.
Awar testified that while other individuals inputted data into the Book
Account, Awar Deposition at 176, when he was Director of Operations, "it
was my responsibility to keep accurate records of the book account."
Id. at 45. Ahava alleges that, according to Sandier, there was
no system of verification which ensured that the Book Account tracked the
Agreement or that deposits by Ahava were correctly recorded. However,
Sandier testified that while he had not
seen anything on a day-to-day basis . . . I know
that all of the information [in the Book Account]
was definitely checked on a monthly basis, and I
know personally I looked at the summary
information for the month and compared them to the
bank statements on probably half the time I was
there, maybe more. Sandier Deposition at 57. Such statements are sufficient to create
a foundation by the custodians of the business records.
Ahava further argues that the Book Account is unreliable and
untrustworthy because it does not contain all of the transactions between
Ahava and AEG in the course of the contractual relationship between the
parties, and because the Book Account does not follow the terms of the
Agreement in several material respects. AEG argues that Ahava never
objected to the inaccuracy of the Book Account until this litigation had
commenced, despite the fact that it was provided with the information
contained in the Book Account throughout the contractual relationship
between the parties.
Questions as to the completeness of the Book Account and its congruence
with the Agreement are more appropriately directed toward showing that
the Book Account, by itself or with other documents, does not demonstrate
that Ahava breached the Agreement. In other words, Ahava's arguments go
to the weight to be placed on the Book Account, rather than to its
admissibility. In United States v. Scholl, 166 F.3d 964 (9th
Cir.), cert. denied, 528 U.S. 873 (1999), the Ninth Circuit
a party need not prove that business records are
accurate before they are admitted. "Generally,
objections that an exhibit may contain
inaccuracies, ambiguities, or omissions go to the
weight and not the admissibility of the evidence."
United States v. Keplinger,
776 F.2d 678, 694 (7th Cir. 1985); see also La Porte
v. United States, 300 F.2d 878, 880 (9th Cir.
1962) (noting "the admissibility of a document, as
distinguished from its weight, normally does not depend upon either
completeness or freedom from ambiguity").
166 F.3d at 978; see also United States v. Reyes,
157 F.3d 949
, 953 (2d Cir. 1998) (business records admitted despite questions
raised about trustworthiness); Schachtman Fagan, Inc. v. Winthrop
Labs.Inc., 82 Civ. 8398, 1985 WL 3126, at *1 (Oct. 15, 1985)
("absence or extent of personal knowledge regarding preparation of
business records [a]ffects weight rather than admissibility of evidence")
(citing United States v. Page, 544 F.2d 982
(8th Cir. 1976)).
Ahava's many objections to the Book Account are taken into account
below. However, the Book Account displays sufficient indicia of
trustworthiness for admission as a business record pursuant to
The Henry Affidavit is Admissible
Ahava objects to the affidavit submitted by Susan Henry ("Henry"), a
senior manager in the Litigation & Fraud Investigations Department at
the accounting firm of BDO Seidman, on the grounds that it is based on
insufficient facts or data, that it is "based on conversations with
others and knowledge gleaned about the case as opposed to general
experience in the particular industry," and that Henry "opines as to the
meaning and application of the contract terms at issue." Def.'s Reply
Mem. in Further Support of Def.'s Mot. for Summ. Judgment and in
Opposition to Pl.'s Mot. for Summ. J. at 4. The standard for the admissibility of expert testimony is set forth in
Federal Rule of Evidence 702:
If scientific, technical, or other specialized
knowledge will assist the trier of fact to
understand the evidence or to determine a fact in
issue, a witness qualified as an expert by
knowledge, skill, experience, training, or
education, may testify thereto in the form of an
opinion or otherwise, if (1) the testimony is
based upon sufficient facts or data, (2) the
testimony is the product of reliable principles
and methods, and (3) the witness has applied the
principles and methods reliably to the case.
The standard was the subject of extensive analysis by the Supreme Court
in Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579(1993), and
Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999).
Daubert charges "trial judges with the responsibility of acting
as `gatekeepers, `" in light of the fact that "the Federal Rules of
Evidence `assign to the trial judge the task of ensuring that an expert's
testimony both rests on a reliable foundation and is relevant to the task
at hand.'" United States v. Salim, 189 F. Supp.2d 93, 99-100
(S.D.N.Y. 2002) (quoting Daubert, 509 U.S. at 597). Thus,
"[t]he determination as to the relevance and reliability of such evidence
is committed to the sound discretion of the trial court."
Daubert, 509 U.S. at 591. In Kumho Tire Co. v.
Carmichael, the Supreme Court clarified that this gatekeeper
function applies to all expert testimony, not just scientific testimony.
526 U.S. at 147 (explaining that Rule 702 makes "no relevant distinction between `scientific' knowledge and `technical'
or `other specialized' knowledge. It makes clear that any such knowledge
might become the subject of expert testimony.").
Henry testified that she based her opinions on review of legal
pleadings in this case, the Agreement and Letter Agreement,
correspondence related to the dealings between AEG and Ahava, the Book
Account and related reconcilations, various bank statements and other
documents evidencing transactions between AEG and Ahava. Henry also based
her opinions on discussions with AEG's present and former personnel. In
the context of the instant motions, Henry's opinions are based on
sufficient facts and data.
Ahava's objections to Henry's testifying based on her discussions with
AEG personnel are drawn from United States v. Duakcnini,
326 F.3d 45 (2d Cir. 2002). However, in that case, a Special Agent for the
Drug Enforcement Administration was testifying in a dual capacity as case
agent and as expert in drug jargon. The Second Circuit was therefore
concerned that his non-expert testimony may have been hearsay. See
id. at 55. Because Henry was retained solely to render an expert
opinion, no such potential confusion exists here.
Finally, Ahava alleges in a conclusory manner that Henry opines as to
the meaning of contract terms. While "testimony encompassing an ultimate
legal conclusion based upon the facts of the case is not admissible," United States v. Bilzerian,
926 F.2d 1285, 1295 (2d Cir. 1991), Ahava has not demonstrated that Henry
has given any such opinion. The thrust of the Henry affidavit is that the
amounts charged by AEG to Ahava do not equal or exceed 50% interest per
annum. Such testimony is within Henry's expertise, and is an appropriate
subject for expert testimony. The Henry Affidavit is therefore
Summary Judgment Standard
Summary judgment is granted only if there is no genuine issue of
material fact, and the moving party is entitled to judgment as a matter
of law. Fed.R.Civ.P. 56(c); see Celotex Corp. v. Catrett,
477 U.S. 317, 322-23 (1986); Silver v. City Univ.,
947 F.2d 1021, 1022 (2d Cir. 1991); see generally 11 James Wm. Moore, et
al., Moore's Federal Practice § 56.11 (3d ed. 1997 &
Supp. 2004). The court will not try issues of fact on a motion for
summary judgment, but, rather, will determine "whether the evidence
presents a sufficient disagreement to require submission to a
[factfinder] or whether it is so one-sided that one party must prevail
as a matter of law." Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 251-52 (1986).
"The party seeking summary judgment bears the burden of establishing
that no genuine issue of material fact exists and that the undisputed
facts establish her right to judgment as a matter of law." Rodricruez v. City of New York, 72 F.3d 1051,
1060-61 (2d Cir. 1995). In determining whether a genuine issue of
material fact exists, a court must resolve all ambiguities and draw all
reasonable inferences against the moving party. Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986);
Gibbs-Alfano v. Burton, 281 F.3d 12, 18 (2d Cir. 2002). Thus,
"[s]ummary judgment may be granted if, upon reviewing the evidence in the
light most favorable to the non-movant, the court determines that there
is no genuine issue of material fact and the movant is entitled to
judgment as a matter of law." Richardson v. Selsky, 5 F.3d 616,
621 (2d Cir. 1993).
A material fact is one that would "affect the outcome of the suit under
the governing law," and a dispute about a genuine issue of material fact
occurs if the evidence is such that "a reasonable [factfinder] could
return a verdict for the nonmoving party." Anderson, 477 U.S.
at 248; R.B. Ventures, Ltd. v. Shane, 112 F.3d 54, 57 (2d Cir.
1997). The Court is "to grant summary judgment where the nonmovant's
evidence is merely colorable, conclusory, speculative or not
significantly probative." Schwimmer v. Kaladjian, 988 F. Supp. 631,
638 (S.D.N.Y. 1997) (citing Anderson, 477 U.S. at 249-50).
Summary Judgment is Denied AEG's Alter Ego Claim AEG argues that Ahava, AFC, and Lewis County Dairy are all alter egos
of one another.*fn2 Under New York law, a plaintiff can establish alter
ego liability only by showing that one defendant has exercised such
"complete domination `in respect to the transaction attacked' so that the
[other defendants] had `at the time' no separate will of [their] own, and
such domination must have been used to `commit fraud or wrong' against
plaintiff, which proximately caused plaintiff's injury." American
Protein Corp. v. AB Volvo, 844 F.2d 56, 60 (2d Cir. 1988), (quoting
Lowendahl v. Baltimore & Ohio R.R., 247 A.D. 144, 157,
287 N.Y.S. 62 (1st Dept.), aff'd, 2 N.Y. 360, 6 N.E.2d 56 (1936),
quoted with approval in Gorrill v.
Icelandair/Fluqleidir, 761 F.2d 847, 853 (2d Cir. 1985)). To satisfy
the control element, AEG must demonstrate "by a preponderance of the
evidence" that AFC and Lewis County Dairy was controlled and dominated by
Ahava with respect to its payment obligations under the Agreement "to
such an extent that it had no separate will of its own" or in other
words, that AFC and Lewis County Dairy were "mere instrumentalit[ies] of
Factors indicating that one defendant controls another "include lack of
normal corporate formality in the subsidiary's existence,
under-capitalization, and personal use of the [other defendants'] funds" by the defendant. Id. citing
Video Innovations, 730 F.2d at 53).
In support of its claim, AEG argues that (i) Banayan is the president
of Ahava, AFC and Lewis County Dairy; (ii) Ahava has represented that it
is undercapitalized; (iii) Ahava and Lewis County Dairy have commingled
funds; (iv) all defendants receive mail from the same mail box addresses;
(v) AFC and Ahava distribute products for Lewis County Dairy; (vi) Ahava
and AFC have substantially identical customers; (vii) customers of AFC
write checks addressed to Ahava to satisfy invoices sent by Ahava; (vii)
AFC and Ahava use the same plant to distribute products; (viii) Ahava,
AFC and Lewis County Dairy employ the same accountant; (ix) AFC served
notice to customers of Ahava that AFC would begin distributing Lewis
County Dairy's products in place of Ahava; and (x) Lewis County Dairy and
Banayan guaranteed the debts Ahava owes to AEG.
Except for (i), (viii), and (x), Ahava either contests AEG' s
allegations or argues that such practices occurred only rarely and ceased
years ago. Ahava states that the three companies had different addresses,
customers, funding sources, and banking relationships. Ahava also
contests the admissibility of the statement that Ahava is
undercapitalized on the grounds that it was made in the course of
settlement negotiations. See Fed.R.Evid. 408. Taking the
facts in the light most favorable to Ahava, AEG has not met its burden on this motion of establishing by a
preponderance of evidence that any domination of AFC and Lewis County
Dairy was so complete that these entities had no will of their own. In
particular, AEG has adduced no specific evidence of domination with
respect to Ahava's payment obligations under the Agreement, alleging only
that because of the alleged overlaps in customers and distribution
plants, as well as commingled funds, that "Defendants have been
able to improperly divert millions of dollars derived from Ahava's
account receivables . . . to other bank accounts controlled by" AFC.
Donnelly Declaration ¶ 38. Even if Ahava had the ability to divert
funds, AEG has not shown that Ahava has actually done so. AEG's motion
for summary judgment on its claim of alter ego liability is accordingly
Summary Judgment is Denied on AEG's Claims for Breach of
Contract, Unjust Enrichment and Conversion
AEG has moved for summary judgment against all defendants on its claims
for breach of contract, unjust enrichment and conversion. Because Ahava
has raised a genuine issue of material fact as to whether the defendants
breached the Agreement, summary judgment is denied as to all claims.
Although the Book Account will be admitted based on the testimony of
Awar and Sandier that it was kept in the course of regularly conducted
business and that it generally shows trustworthiness, the Book Account
and supporting documentation do not support a finding that AEG is entitled to judgment as a matter
of law on its claims in light of Ahava's numerous challenges to the
incompleteness of the document, and in particular in light of Ahava's
allegations that the Book Account does not comport with the Agreement.
Each of AEG's claims rests on the argument that Ahava either breached
the Agreement by defaulting on its contractual obligations or that Ahava
improperly refused to return approximately $2.5 million of over $37
million advanced to Ahava by AEG. In order to prevail on its breach of
contract claim, AEG must demonstrate that the undisputed facts prove that
Ahava breached the contract. See Saffire Corp. v. Newkidco,
LLC, 286 F. Supp.2d 302, 306 (S.D.N.Y. 2003). Similarly, to prevail
on a claim of unjust enrichment, the undisputed facts must show, among
other elements, "that the circumstances are such that in equity and good
conscience the defendant should return the money or property to the
plaintiff." Golden Pacific Bancorp. v. F.D.I.C., 273 F.3d 509,
519 (2d Cir. 2001). To establish a claim of conversion under New York
law, the undisputed facts must show, among other elements, "that the
defendant exercised unauthorized interference with the plaintiff's
ownership or possession of that property." Rose v. Amsouth Bank of
Florida, 296 F. Supp.2d 383, 397 (E.D.N.Y. 2003). Construing all
ambiguities and inferences against AEG, there are disputed facts as to
each of these elements. As to the breach of contract claim, there is a material dispute as to
whether the terms of the Agreement were followed. Ahava has alleged that
AEG never purchased accounts receivable from Ahava, even though such
transactions formed the basis for the Agreement. Ahava also alleges that
AEG has failed to credit approximately $8 million which Ahava claims it
paid to AEG. The claim for unjust enrichment is similarly based on AEG's
claim that Ahava breached the Agreement, see Pl.'s Summary
Judgment Mem. at 13, and Ahava's claims raise material questions of fact.
As to the conversion claim, for the reasons stated previously, AEG has
not shown undisputed facts which prove that AEG owes Ahava $2 million.
While AEG has provided substantial rebuttals to Ahava's claims that AEG
breached the Agreement and that Ahava does not owe AEG anything, it
cannot be determined on this record that no "reasonable [factfinder]
could return a verdict for the nonmoving party," Anderson, 477
U.S. at 248, and summary judgment is therefore denied as to each claim.
Further, because AEG has not demonstrated on this motion a breach by
Ahava "of or failure to perform any of its representations, warranties,
commitments or covenants in this Agreement," Agreement ¶ 13, AEG is
not entitled to costs and attorneys' fees.
Ahava's Motion for Summary Judgment is Denied
The defendants have moved for summary judgment dismissing the same
three claims against them, for breach of contract, unjust enrichment, and conversion. Construing all ambiguities and
inferences against Ahava, it cannot be shown that no reasonable
factfinder would not find for AEG on each of its claims.
In particular, the Book Account and Henry's testimony, which are
presumed accurate in the context of Ahava's motion, both demonstrate that
Ahava owes AEG several million dollars. Henry's testimony raises numerous
issues of material fact as to the accuracy and completeness of the tables
submitted by Ahava purporting to show improper fees and exorbitant rates
of interest charged by AEG. Construing the Book Account and the Henry
Affidavit in AEG's favor, AEG has shown both that Ahava defaulted on the
Agreement, and that the interest rate charged to Ahava was below 25%,
negating the factual basis for Ahava's usury defense.
Ahava also moves to dismiss the conversion claim on the grounds that it
is duplicative of the breach of contract claim. "It is a well-established
principle that a simple breach of contract is not to be considered a tort
unless a legal duty independent of the contract itself has been
violated . . ." Spanierman Gallery, PSP v. Love, 03 Civ. 3188,
2003 WL 22480055, at *3 (S.D.N.Y. Oct. 31, 2003) (quoting
Clark-Fitzpatrick, Inc. v. Long Island R. Co., 70 N.Y.2d 382,
521 N.Y.S.2d 653, 516 N.E.2d 190, 193 (1987)); see also New York
Racing Ass'n v. Meganews, Inc., 97 CV 1091, 2000 WL 307378, at *5
(E.D.N.Y. Mar. 21, 2000) (conversion claims "will be deemed redundant
when Marriages are merely being sought for breach of contract.'") (quoting Peters Griffin
Woodward, Inc. v. WCSC, Inc., 88 A.D.2d 883, 884, 452 N.Y.S.2d 599,
600 (1st Dept' 1982)).
AEG has alleged a distinct harm in its claim for conversion. The
damages from the breach of contract allegedly arise from Ahava's failure
to pay AEG any part of the overdraft position on the Book Account, while
the damages on the conversion claim (as well as the unjust enrichment
claim) allegedly arise from the approximately $2.5 million in funds which
were advanced to Ahava, and which Ahava has not repaid. Further, AEG has
alleged "that defendants had a duty to remit particular funds to the
plaintiff." Meganews, 2000 WL 307378, at *5. Conversion claims
may be alleged in addition to breach of contract claims as long as the
"legal duty . . . spring[s] from circumstances extraneous to, and not
constituting elements of, the contract, although it may be connected with
and dependent upon the contract." Spanierman, 2003 WL 22480055,
at *3. AEG's conversion claim will therefore not be dismissed as
Neither The Applicability Nor the Effect of Ahava's Usury
Defense is Clear from the Record
Ahava has alleged that AEG is guilty of criminal usury because the
effective interest rate charged to Ahava over the course of their
contractual relationship exceeds 25% per annum. See N.Y. Penal
Law § 190.40. AEG disputes Ahava's calculation of the interest rate, arguing that even if all fees charged to Ahava
are included when calculating the effective rate of interest, the rate
does not exceed 24.54%.
On the record before the Court, it is not possible to make a
determination as a matter of law as to the effective interest rate.
However, for the purposes of AEG's motion for summary judgment only, it
may be assumed that the interest rate exceeds 25%. Even if that were the
case, it is still not clear to what relief Ahava would be entitled, if
Ahava has not specified the total amount of money which was allegedly
loaned to it by AEG. However, the money advanced to Ahava over the course
of their contractual relationship apparently totaled in the tens of
millions of dollars. New York's usury laws, however, do not regulate
transactions over $2.5 million. See N.Y. Gen. Oblig. Law §
5-501(6)(b); see also Tides Edge Corp. v. Central Federal Sav.,
F.S.B., 151 A.D.2d 741, 742, 542 N.Y.S.2d 763, 765 (2d Dep't 1989).
For purposes of determining the law's applicability,
Loans . . . aggregating two million five hundred
thousand dollars or more which are to be made or
advanced to any one borrower in one or more
installments pursuant to a written agreement . . .
shall be deemed to be a single loan . . . for the
total amount which the lender or lenders have
agreed to advance or make pursuant to such
agreement on the terms and conditions provided
therein. § 5-501(6)(b). The total amount of AEG's loans to Ahava
therefore must be calculated in order to determine the applicability of
the usury defense.
Loans of greater than $250,000 but less than $2.5 million are not
subject to New York's civil usury laws but are subject to criminal usury
laws. § 5-501(6)(a). If AEG's loans to Ahava total less than $2.5
million, and if Ahava is able to establish that the loans were criminally
usurious, it is unclear under New York law what remedy is authorized.
Ahava argues that AEG should be barred from recovering under the
Agreement because of the usurious arrangement. Ahava is apparently
contending that if the Agreement is found to be criminally usurious, in
effect if not on its face, it will be rendered void, although Ahava
nowhere makes this point explicitly. Some courts have so held. See,
e.g., Hufnagel v. George, 135 F. Supp.2d 406, 406-07 (S.D.N.Y.
2001); Fareri v. Rain's Intern. Ltd., 187 A.D.2d 481,
589 N.Y.S.2d 579 (2d Dep't 1992); In re McCorhill, 86 B.R. at 792.
However, the Second Circuit considered the issue in a section of its
opinion explicitly labeled as dictum, and opined that "it is an open
question under New York law whether a criminally usurious loan is void."
Venture Mortgage, 282 F.3d at 190-91 (disagreeing with
Hufnagel and Fareri).
The Venture Mortgage court reached that conclusion "from a
close reading of the complex and cross-referencing statutes that compose New York's usury law," in which it appears "that the
voiding provision only operates to void loans that violate the
civil usury statute a statute that by its terms applies
only to loans of less than $250,000 . . ." Id. at 189 (citing
N.Y. Gen. Oblig. Law §§ 5-501, 5-511; N.Y. Banking Law § 14-a). It
further noted that "[n]othing we see in the criminal usury statute
provides for voiding, and it is unclear whether the Legislature intended
that criminally usurious loans of $250,000 or greater be voided."
Id. (citing N.Y. Penal Law § 190.40). The Venture
Mortgage court reviewed the policy rationales and noted that they
both favored and disfavored finding criminally usurious loans void.
Id. Because this unsettled issue was neither raised nor briefed
by either party, it would be premature for the Court to rule on it.
It appears, however, that at least some remedy was contemplated by the
Legislature for a borrower who is subjected to a criminally usurious
loan. General Obligation Law § 5-521(1) prohibits corporations from
interposing the defense of usury in any action. However, subsection 3 of
§ 5-521 provides an exception to that provision in "any action in
which a corporation interposes a defense of criminal usury as described
in section 190.40 of the penal law." Because it would be inconsistent to
provide for a defense without also providing a remedy, some kind of
remedy must be available.*fn3 The Venture Mortgage court,
however, was not convinced that § 5-521(3) implied "that a loan in violation of
the penal law is void ab initio." Id. at 189 n.3.
Instead of voiding the loan, a successful defense of criminal usury may
result instead "merely in a cancellation of the interest obligation but
not the obligation to pay principal, or in a revised obligation to pay a
non-usurious rate." Id. Neither of these remedies can be
derived either from case law or from statutory law. Without further
briefing from the parties, the Court will not rule on this question.
For the reasons set forth above, the motions for summary judgment by
both AEG and Ahava are denied, as is AEG's motion for costs and
attorneys' fees. The Book Account is admissible as a business record
pursuant to Fed.R.Evid. 803(6), and the Henry Affidavit is admissible
pursuant to Fed.R.Evid. 702. Finally, if Ahava elects to continue to
pursue its usury defense under New York law, the parties are directed to
brief the applicability of the usury defense as well as available
remedies in connection with any in limine motions. AEG will
serve Ahava with its proposed Pretrial Order on May 5. The final Pretrial
Order will be filed on May 17 any motions in limine will be made returnable on that
day. The trial will commence on May 17, 2004.
It is so ordered.