Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.


December 2, 2004.

INTER IMPEX S.A.E., Plaintiff,

The opinion of the court was delivered by: GEORGE DANIELS, District Judge


Plaintiff brings suit alleging breach of contract, breach of express and implied warranties, negligence, and fraudulent misrepresentation. Defendant Comtrade Corporation ("Comtrade") asserted cross-claims against Agri-Mark, Inc. ("Agri-Mark") and Berkshire Dairy and Food Products, Inc. ("Berkshire"). Defendant Agri-Mark filed a motion to dismiss plaintiff's complaint and Comtrade's cross-claims pursuant to Fed.R.Civ.P. 12(c). For the reasons stated below, defendant Agri-Mark's motion to dismiss is granted.

I. Background

  Plaintiff Inter Impex S.A.E. ("Inter Impex") is an Egyptian corporation that imported skim milk powder into Egypt. Plaintiff alleges that in December of 1997, it entered into an agreement with defendants Comtrade and Berkshire to purchase 175 metric tons of skim milk powder ("Agreement"). Subsequently, defendants Comtrade and Berkshire invoiced plaintiff for this shipment. On December 18, 1997, pursuant to this Agreement, plaintiff provided a letter of credit for $309,750 payable to Comtrade for the shipment made on or before December 31, 1997. Plaintiff alleges that payment of this letter of credit "was assigned to defendants Berkshire and Agri-Mark for the Shipment." Complaint at 3, ¶ 10. Thereafter, the shipment was made in containers carrying 7000 bags of skim milk powder as per the packing list. Plaintiff claims that the packing list indicated that the milk powder was "padded in the three-ply paper bags with polyliner of 25 kgs. net each" and that the product was produced by Agri-Mark, Inc. Id. at 3, ¶ 11. The shipment arrived in Egypt on January 27, 1998 and was discovered damaged on February 12, 1998. Plaintiff claims that the damage to the shipment was due to improper packaging in violation of the Agreement and letter of credit. Id. at 3, ¶ 13.

  Inter Impex filed suit against defendants Comtrade, Berkshire and Agri-Mark on January 7, 2000. Defendant Comtrade subsequently asserted cross-claims against defendants Agri-Mark and Berkshire. Comtrade alleges that it entered into an agreement with "Berkshire for the purchase of the Shipment in December 1997 to be manufactured, packaged and shipped to Plaintiff by Cross-Defendants in compliance with the rules, regulations and requirements of the Commodity Credit Corporation and the United States Department of Agriculture ("USDA")." Comtrade's Answer and Cross-Claims at 6, ¶ 26. Comtrade further maintains that Berkshire and Agri-Mark employed a forwarding agent to prepare the packing list and weight list who subsequently "misdescribed the packaging of the Shipment provided and shipped by" Berkshire and Agri-Mark. Id. at 6, ¶¶ 28-29. Comtrade alleges that the shipment was, in fact, not shipped with a polyliner and that the packing and closure of the bags provided by Berkshire and Agri-Mark were not in accordance with the agreement of purchase, invoices, Letter of Credit or the rules, regulations, requirements and standards of the USDA or for export packaging. Id. at 6, ¶ 29-30. Comtrade argues that Berkshire and Agri-Mark are to be held liable for all of plaintiff's claims and, therefore, must indemnify Comtrade for any liability.

  Plaintiff Inter Impex and cross-claimant Comtrade assert four causes of action against defendants Berkshire and Agri-Mark including: breach of contract; breach of express and implied warranty; negligence; and fraudulent misrepresentation. In its motion to dismiss, Agri-Mark argues that it was not a party to plaintiff's contract with Comtrade and Berkshire and therefore cannot be held liable for breach of contract. Agri-Mark asserts that any negligence claim must be dismissed because plaintiff's complaint and defendant Comtrade's cross-claim only allege damages resulting in `economic loss.' Agri-Mark argues that allegations of economic loss are insufficient to maintain a cause of action under a theory of express or implied warranty. Lastly, Agri-Mark asserts that plaintiffs and Comtrade have not sufficiently pled a fraudulent misrepresentation claim.

  Plaintiff Inter Impex and cross-claimant Comtrade submitted a joint memorandum of law in opposition to Agri-Mark's motion and further moved to amend their pleadings.

  II. Discussion

  In evaluating a motion for judgment on the pleadings, this Court accepts the allegations in the complaint as true and will construe them in the light most favorable to the non-movant. See King v. Am. Airlines, Inc., 284 F.3d 352, 355 (2d Cir. 2002). All reasonable inferences will be drawn in favor of that party. See Patel v. Searles, 305 F.3d 130, 134-35 (2d Cir. 2002). "A complaint will only be dismissed if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Id. at 135 (internal quotations omitted), quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

  A. Breach of Contract

  Plaintiff's first cause of action alleges that the "improper packaging was in violation of the Agreements and letter of credit by the Defendants." Complaint at 3, ¶ 13. Plaintiff, however, has failed to allege that defendant Agri-Mark was a party to that Agreement. On the contrary, plaintiff has specifically alleged that it "entered into an agreement unto Defendants Comtrade and Berkshire for the purchase of 175 metric tons 3% of skim milk powder. . . ." Id. at 2, ¶ 7 (emphasis added). Plaintiff has also failed to allege that Agri-Mark was a party to the letter of credit, stating instead that "Plaintiff provided its letter of credit in the amount of $309,750.00 payable to Defendant Comtrade." Id. at 3, ¶ 9 (emphasis added).*fn1 In Alaska Textile Co., Inc. v. Chase Manhattan Bank, N.A., 982 F.2d 813 (2d Cir. 1992), the Second Circuit described the basic function of letters of credit

In its classic form, the letter of credit is only one of three distinct relationships between three different parties: (1) the underlying contract for the purchase and sale of goods between the buyer ("account party") and the seller ("beneficiary"), with payment to be made through a letter of credit to be issued by the buyer's bank in favor of the seller; (2) the application agreement between the bank and the buyer, describing the terms the issuer must incorporate into the credit and establishing how the bank is to be reimbursed when it pays the seller under the letter of credit; and (3) the actual letter of credit which is the bank's irrevocable promise to pay the seller-beneficiary when the latter presents certain documents . . . that conform with the terms of the credit. The great utility of the letter of credit derives from the fact that these three relationships are utterly independent of one another.
Id. at 815. Plaintiff in the present case fails to allege that Agri-Mark acted as either the account party, the beneficiary, or the bank in the creation of the letter of credit. Cross-claimant Comtrade likewise fails to allege that Agri-Mark was a party to either the purchase agreement or the letter of credit.

  Rather, plaintiff Inter Impex and cross-claimant Comtrade rely solely on Inter Impex's sole allegation that "the letter of credit was assigned to the Defendants Berkshire and Agri-Mark for the Shipment." Id. at 3, ¶ 9. This claim, however, is bald, conclusory and unsupported by any factual allegations of a specific assignment agreement. An assignment is a separate agreement between the assignor and the assignee which merely transfers the assignor's contract rights, leaving them in full force and effect as to the party charged. Citibank, N.A. v. Tele/Resources, Inc., 724 F.2d 266, 269 (2d Cir. 1983) (citing Molina v. Barany, 56 N.Y.S.2d 124, 132 (1945). Plaintiff fails to allege any such agreement. Plaintiff attempts to support this conclusory allegation by submitting the declaration of Fouad Abouelezz, cross-claimant Comtrade's president. In his declaration, Abouelezz asserts that the "Letter of Credit was assigned and paid to the Defendants Berkshire and Agri-Mark for Shipment. See Robbins collection letter to the bank (Exhibit 4)." Declaration of Fouad Abouelezz Pursuant to FRCP Rule 12(c) and 15 at 3, ¶ 8. Upon examination, however, the Robbins Fleisig Forwarding, Inc. letter attached as Exhibit 4, upon which cross-claimant Comtrade relies, does not identify defendant Agri-Mark as the assignee of the letter of credit. Indeed, Agri-Mark is not named in the entire document.

  Even if plaintiff had sufficiently alleged the existence of an assignment agreement, plaintiff and cross-claimant still fail to allege that they were a party to such an agreement, giving them privity with defendant Agri-Mark, or that Comtrade transferred their beneficiary status under the letter of credit to Agri-Mark and, therefore, were owed duties by Agri-Mark. Plaintiff's sole allegation of assignment does not specify whether plaintiff is alleging an assignment of the proceeds of the letter of credit or a transfer of the letter of credit. "The distinction between transfer of a letter of credit and assignment of the proceeds is significant, for a transfer effectuates a more complete change. The transferee is effectively substituted for the original beneficiary, an assignment of proceeds, by contrast, changes only the party entitled to receive payment of the proceeds." Die-Matic Tool Company v. Advanced Air Support Services, Inc., ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.