United States District Court, S.D. New York
January 10, 2005.
SUN CHEMICAL CORP., Plaintiff,
EXCELSIOR PACKAGING GROUP, INC. and EXCELSIOR PACKAGING WEST, LLC, Defendants.
The opinion of the court was delivered by: HAROLD BAER, JR., District Judge
OPINION & ORDER
Sun Chemical Corp. ("Sun"), an ink supply company, entered into
a requirements contract with the related entities of Excelsior
Packaging Group, Inc. and Excelsior Packaging West, LLC
(collectively, "Excelsior"). When Excelsior failed to make
payments for quantities of ink it purchased, Sun filed suit for
breach of contract, conversion/replevin, and unjust enrichment
and sought damages, pre-judgment interest, attorneys' fees,
costs, and replevin of an ink processing machine in Excelsior's
Yonkers facility. Present before the Court is Sun's motion for
summary judgment pursuant to Federal Rule of Civil Procedure
("Fed.R.Civ.P.") 56. Following oral argument on the motion on
January 7, 2005, I granted Sun's motion with respect to liability
and scheduled an inquest for February 8, 2005. I write here to
briefly set forth the pertinent facts and the basis for my
A. The Agreement*fn1
On May 30, 2003, Sun and Excelsior entered into a contract, the
In-Plant Supply Agreement ("the Agreement"), under which
Excelsior agreed to purchase 90% of its printing ink and related
products requirements for its Yonkers and Vancouver facilities
from Sun for a term of three years (beginning on April 16, 2003).
Agreement ¶¶ 3, 5. The Agreement provided that Sun would send an
invoice to Excelsior each month for the "consignment ink or
materials opened and prepared for use by Excelsior." Id. ¶ 4A.
"[T]itle to the[se] containers of ink remained with Sun Chemical,
and they were only charged to Excelsior once they were opened."
Tr.*fn2 at 3:3-5; Agreement ¶ 6. It was agreed that Excelsior would be billed for consignment items
"based on a physical inventory . . . each month." Agreement ¶ 4A.
In addition, Excelsior would be billed for "unopened consignment
items not used after 90 days. . . ." Id. Non-consignment items
that is, "[t]hose inks that were special order[s] that weren't
part of the regular inventory  . . . were billed after they
were delivered and were not based on whether the container was
opened or not." Tr. at 3:35-4:3. Excelsior agreed to pay all
invoices in full within 30 days. Agreement ¶ 4A. Interest on
overdue amounts was agreed to accrue at the lesser of 1% per
month or the maximum rate legally permissible. Id.
In turn, Sun agreed to provide high quality products, as well
as an on-site ink technician at each of Excelsior's two
facilities. Id. ¶¶ 3, 1. The ink technician would serve a
variety of functions, including, inter alia: ink room
management, inventory control, color matching and ink blending,
ink ordering, quality assurance, technical support, record
keeping, and training. Id. ¶¶ 1, 2A-S. Sun also agreed to
provide Excelsior with a monetary business incentive, the first
payment of which was $200,000 to be paid upon execution of the
contract. Id. ¶ 4B, App. B. This payment would "be amortized
over the life of the contract." Id. App. B. In the event that
"the contract is terminated prior to the term, the unamortized
portion [would] become? payable within 30 days of termination."
Id. Finally, Sun agreed to contribute $3,000 per month (up to a
maximum of $100,000 over the term of the contact) towards the
purchase or lease of ink dispensing equipment at Excelsior's
Vancouver facility. Id. ¶ 7. At the Yonkers facility, Sun was
to upgrade and maintain the existing equipment. Id. In the
event of early termination, the Agreement provided that Sun "will
remove the dispensing equipment" from the Yonkers facility. Id.
Excelsior further agreed that it would "sign a UCC financing
statement noting Sun['s] . . . continuing interest in all
equipment, and . . . keep a notice stating (Property of Sun . . .)
on the equipment? at all times." Id. However, the parties
agreed that upon completion of the three year contract, "Sun will
transfer ownership/title of the dispenser to Excelsior." Id.
As for remedies in the event of a breach, Sun and Excelsior
agreed that "[u]pon the occurrence of a material default, other
than the payment of invoices . . ., by either party, the
non-defaulting party shall notify the defaulting party in writing
. . . and shall set forth with reasonable specificity the nature
of the default." Id. ¶ 14C. The appropriate form of official
notice was designated as certified mail, return receipt requested
to individuals specified in paragraph 23 of the Agreement. After
official notice, the defaulting party would have 60 days to cure
the default. Should the default not be cured, the non-defaulting
party would the have the right to terminate the Agreement,
provided it did so in writing. With respect to a default in
payment, the Agreement set out that in the event that Excelsior failed to correct a default
in payment within 10 days, Sun would have "the right to 1) place
Excelsior on COD; 2) terminate the Agreement; 3) withdraw the
in-plant technicians from Excelsior's facilities; 4) remove
Product inventory from Excelsior's facilities; and/or 5) exercise
any and all other [legal] rights. . . ." Id. ¶ 14A. The parties
agreed that New Jersey law would govern any dispute arising out
of the Agreement. Id. ¶ 28.
Finally, the Agreement contained a merger clause which provided
that "the foregoing represents the entire understanding of the
parties relating to the subject matter hereof, superceding all
other understandings, written or oral, relating thereto." Id. ¶
27. This clause also set out that "[s]hipments made by Sun . . .
shall also be made in accordance with Sun['s] . . . standard
general conditions," which "are printed on the back of Sun['s] . . .
B. Excelsior's Default
It is undisputed that Excelsior failed to pay invoices within
the 30 days provided for by the Agreement. In fact, Excelsior did
not pay any invoices in a timely manner from April 2003 to
April 2004. Sekowski Decl. ¶ 3; Gallagher Decl ¶ 6. According to
Ronnie Shemesh, the CFO, CEO, and owner of Excelsior, "the
invoices were fraudulent and not appropriate and over-billed and
did not warrant payment because services were not rendered as per
the in-plant supply agreement." Shemesh Dep. at 279:25-280:4. On
February 16, 2004, Sun gave written notice of Excelsior's
default. Mallon Decl., Ex. F ("Since our meeting of January 8th,
where you had committed to activity on the? [outstanding]
balances, repeated efforts to contact you have gone unanswered,
and no payment activity has ensued."). Thereafter, Sun informed
Excelsior by letter dated March 1, 2004 that it would terminate
the Agreement with respect to Excelsior's Vancouver facility,
remove the ink technician and consignment inventory at the
Yonkers facility, and require that all future ink orders by paid
C.O.D. Id., Ex. G. Finally, on March 25, 2004, Sun's senior
corporate attorney informed Excelsior in writing that unless it
paid the full outstanding balance of $486,942.67 from the two
facilities, Sun would pursue legal remedies to recover the
amounts due, its ink dispensing equipment, the unamortized
portion of the $200,000 business incentive payment, and the costs
of litigation. Id., Ex. H at 1. Excelsior did not respond and
this lawsuit ensued.
For his part, Shemesh, claims that Sun had a history of
improper billing practices with Excelsior and owed Excelsior some
$3-4 million for overcharges. E.g., Shemesh Decl. at 25-29.
Nonetheless, after he purchased Excelsior from its previous
owners, he agreed to renew the ink supply contract with Sun.
Id. at 68:19-69:12. When questioned about his willingness to
enter into a contract with a company he believed had committed substantial
fraud, Shemesh asserted that it was very difficult and costly to
change ink suppliers. Id. at 31:17-22, 69:8-10, 204:25-205:3.
In response to Sun's allegations in this matter, Shemesh contends
that Sun too was in breach of the Agreement one month after it
was executed. According to Shemesh, Sun's invoices were inflated,
id. at 202:14-23, and failed to, inter alia, upgrade and
service the ink dispensing equipment, provide an ink technician
and technical support, provide ink systems that could print with
regularity, and contribute $3,000 per month to the Vancouver
equipment, e.g., id. at 268:13-25, 277:2-11. As a result,
Excelsior could not achieve the print quality or efficiency
promised. Id. at 278:6-14. Shemesh asserts that he made
numerous verbal complaints about Sun's purported over-billing and
breaches and was informed by "management" that Sun was taking
care of these issues. E.g., id. at 278:23-25. At no time did
he provide written notice of Sun's purported breach pursuant to
the terms of the Agreement. Id. at 221:19-222-21;
A. Standard of Review
Pursuant to Fed.R.Civ.P. 56(c), a district court must grant
summary judgment if the evidence demonstrates that "there is no
genuine issue as to any material fact and [that] the moving party
is entitled to judgment as a matter of law." Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 250 (1986). "Summary judgment is
properly regarded not as a disfavored procedural shortcut, but
rather as an integral part of the Federal Rules as a whole, which
are designed to `secure the just, speedy and inexpensive
determination of every action.'" Celotex Corp. v. Catrett,
477 U.S. 317, 327 (1986) (quoting Fed.R.Civ.P. 1).
To determine whether there is a genuine issue of material fact,
the Court must resolve all ambiguities and draw all inferences
against the moving party. United States v. Diebold, Inc.,
369 U.S. 654, 655 (1962) (per curiam); Donahue v. Windsor Locks Bd.
of Fire Comm'rs, 834 F.2d 54, 57 (2d Cir. 1987). However, the
mere existence of disputed factual issues is insufficient to
defeat a motion for summary judgment. Knight v. U.S. Fire Ins.
Co., 804 F.2d 9, 11-12 (2d Cir. 1986). The disputed issues of
fact must be "material to the outcome of the litigation," id.
at 11, and must be backed by evidence that would allow "a
rational trier of fact to find for the non-moving party,"
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986). The non-movant "must do more than simply show
that there is some metaphysical doubt as to the material facts."
Id. With respect to materiality, "substantive law will identify
which facts are material. Only disputes over facts that might affect the outcome of the suit under the
governing law will properly preclude entry of summary judgment.
Factual disputes that are irrelevant or unnecessary will not be
counted." Anderson, 477 U.S. at 248.
B. Choice of Law
Here, as noted, paragraph 28 of the Agreement, entitled
"Governing Law" (all caps removed), provides that "[t]his
Agreement is to be construed and the respective rights of Sun . . .
and Excelsior are to be determined according to the laws of the
State of New Jersey, without reference to choice of law
provisions." It is firmly established under New York law, that
where a case involves a contract with a clear choice-of-law
provision, "[a]bsent fraud or violation of public policy, a court
is to apply the law selected in the contract as long as the state
selected has sufficient contacts with the transaction." Hartford
Fire Ins. Co. v. Orient Overseas Containers Lines (UK) Ltd.,
230 F.3d 549, 556 (2d Cir. 2000); Cargill, Inc. v. Charles Kowsky
Res., Inc., 949 F.2d 51, 55 (2d Cir. 1991) ("New York courts
generally defer to the choice of law made by the parties to a
contract."). Moreover, the "parties' intention . . . [is] to be
given heavy weight in determining which jurisdiction has the most
significant contacts." Mechanic v. Princeton Ski Shop, Inc.,
No. 91 Civ. 6740, 1992 WL 397576, at *3 (S.D.N.Y. Dec. 30, 1992).
Given that Sun has its principal place of business in New Jersey
and the parties have agreed that their rights under the Agreement
are to be governed by New Jersey law, the Court will apply New
Jersey law to this dispute.
C. Breach of Contract
Under New Jersey law, a breach of contract claim requires that:
(1) a valid contract existed between the parties; (2) breach of
the contract; (3) performance by the non-breaching party; and (4)
damages as a result. Video Pipeline, Inc. v. Buena Vista Home
Entm't, Inc., 275 F. Supp. 2d 543, 566 (D.N.J. 2003). It is
undisputed that the Agreement is a valid contract. Moreover,
Excelsior has all-but conceded that it breached the Agreement.
Excelsior acknowledged that it did not make payments on Sun's
invoices within the contractually required 30-day period,
although it contends that it was not required to do so because
Sun itself was in breach of the Agreement, something that will be
discussed in greater detail below. Excelsior did not, however,
comply with the notice and cure provisions of the Agreement, the
previously agreed-upon method of addressing defective
performance. It is also evident Excelsior's arguments to the
contrary notwithstanding that Sun delivered the ink and other
products for which it invoiced Excelsior. Excelsior's failure to
make payment triggered consequences set out in the Agreement,
such as refund of the unamortized portion of the business incentive payment and forfeit of the ink
dispensing equipment, and authorized Sun to terminate the
By way of defense, Excelsior raises a number of arguments.
First, Excelsior contends that it is not liable because Sun also
breached the agreement. Excelsior, however, admits that it did
not provide Sun with written notice of the default as required by
¶ 14C of the Agreement. Moreover, not all of Excelsior's
contentions are borne out by the evidence. For example, Steven
Neal, who at the time in question was a technical sales
representative for Sun, testified and his testimony was
uncontradicted that he received no complaints from Shemesh
about the ink technician or the technical support. Neal Dep. at
47:15-48:4, 49:23-50:12, 77:15-19, 81:18-22, 82:7-10. Under the
Agreement, Excelsior, following a breach, was required to provide
written notice and after 60 days, terminate the agreement.
Shemesh apparently failed to comprehend this requirement. At
deposition, when asked whether he provided Sun with written
notice of it alleged failure to lease ink dispensing equipment
for Excelsior's Vancouver facility, he testified, "For what
purpose? . . . I guess what you're saying is that I should on a
daily basis read the agreement and baby-sit them to make sure
that on each and every day they complied with the myriad of
obligations [under] the agreement?" Shemesh Dep. at 254:22,
255:3-7. Although the notice and cure provision apparently pained
Shemesh, this was what he himself agreed to. To the extent that
Excelsior contends Sun's ink was deficient, e.g., id. at
278:9-14, the Agreement provided that Excelsior's "sole remedy
for defective Products or equipment shall be replacement . . .
or, a Sun['s] . . . option, return of the purchase price. . . ."
Agreement ¶ 13. Thus, on this score, Excelsior's sole remedy was
to notify Sun of its alleged breach of its agreement to provide
high quality ink and permit Sun to either replace the product or
issue a refund. Nowhere does the Agreement permit Excelsior to
unilaterally deduct or refuse payment for allegedly deficient ink
or other shortcomings.
Second, Excelsior contends that Sun has failed to prove that
Excelsior received and consumed the ink for which it was billed.
This argument is contradicted by the testimony of both Shemesh
and Neal and misapprehends the agreed-upon method of billing. As
noted, the Agreement provides that "Excelsior will be invoiced
monthly for consignment ink or materials opened and prepared for
use by Excelsior. Consumption shall be based on a physical
inventory conducted by the Ink Technician at closing time each
month." Agreement ¶ 4A. Further, all "unopened consignment items
not used after 90 days will be billed." Id. Shemesh
acknowledged at his deposition that Excelsior received ink from
Sun until the time Sun terminated the Agreement, e.g., Shemesh
Dep. at 202:24-203:8, 204:7-205:7, something that was confirmed
by Neal, Neal Dep. at 124:6-11. At deposition, Neal testified that at the end of each
month he (or someone working at the Excelsior facility) would
inventory the open drums of ink and bill Excelsior accordingly.
Neal Dep. at 29:20-30:3. Jose Mendez, Excelsior's ink room
manager, would review the levels of ink with Sun's employee at
the Excelsior facility and place additional ink orders. Id. at
30:11-24. Thus, employees of both Sun and Excelsior made
decisions about the amount of ink used and to be shipped to
Excelsior. Id. at 31:2-6. Indeed, according to Neal, no one at
Excelsior ever disagreed with the amount of ink delivered insofar
as its correspondence with the amount billed on the invoice.
Id. at 124:6-11. There is no serious question that Excelsior
received and used the ink. Excelsior's arguments to the contrary
are belied by its alternative arguments, such as its assertion
that Sun's failure to upgrade and service the ink dispensing
machine reduced productivity and resulted in inferior print
quality. Surely, there could be no inefficiency or quality issues
if there was no ink.
Third, Excelsior contests the amounts listed in the invoices.
For example, Excelsior contests the final invoice (No.
1111073825) in the amount of $13,881.27. With its reply papers,
Sun produced a declaration from Stewart Gallagher ("Gallagher"),
who is responsible for overseeing Sun's western branches and
operations. Gallagher explained that following a complaint from
Excelsior's Vancouver facility, Sun conducted an audit of all
billing going as far back as 2002. Gallagher Decl. ¶ 3. As a
result, Sun a credit was entered in the amount of $22,708.55 and
a corrected invoice was issued in the amount of $13,881.27 (No.
1111073825). Id. Other than this one instance, which prompted
an audit, Excelsior did not provide and Sun did not receive
written notice of any billing error. Shemesh Dep. at 164:12-16;
see also id. at 221:14-222:21
Fourth, Excelsior argues that the invoices include the cost of
technical services and equipment, which Excelsior contends it
never received. At his deposition, Neal testified that he
received no complaints regarding the performance of the Yonkers
site ink technician or technical support, despite the fact that
he was questioned repeatedly about this. Neal Dep. at 47:15-48:4,
49:23-50:12, 77:15-19, 81:18-22, 82:7-10. However, Neal admitted
that Sun did not upgrade the ink dispensing equipment and only
provided daily maintenance on it from May 2003 through the end of
the year. Neal Dep. at 55:8-17. But he also testified that Sun
did get quotes for the cost of upgrading the machinery, id. at
54:13-19, and did upgrade the computer, id. at 56:2-8. And, as
Sun noted at oral argument, "[t]here was not a specific time
frame for completing those upgrades." Tr. at 5:15-16. Sun may
well have been deterred from making significant expenditures when
"Excelsior was already behind in payments from the first month."
Id. at 5:17-18. Further, Excelsior did not adhere to the agreed-upon procedure for
notifying Sun of its alleged default to provide it with an
opportunity to correct the problem. Any deduction of an amount
from the invoices would be tantamount to awarding it damages on a
counterclaim, which Excelsior did not timely file. In any event,
the far better course, as I already informed the parties, is to
determine the precise amount of damages at an inquest.
Finally, according to Shemesh, Excelsior never received the
$200,000 business incentive payment promised under the Agreement.
Sun counters that this payment was issued in the form of a credit
to Excelsior's account. At deposition, Shemesh acknowledged that
Excelsior was given a $200,000 credit, but he asserted that this
was not the business incentive payment, but rather, it
represented partial compensation for the $3-4 million he believed
Sun owed Excelsior due to its improper billing practices earlier
in the business relationship. Shemesh Dep. at 57:7-9. According
He had authority for two hundred fifty thousand
dollars. Two hundred of it was given in the form of a
credit . . . Fifty thousand I believe he . . . would
earmark . . . within the agreement for an upgrade.
Beyond that he would need to secure funds from
unusual sources . . . he had some fungible funds . . .
and that's where the three fifty came from a total
sum of five hundred and fifty thousand dollars and in
the negotiation I asked for five fifty. He is only
agreeing to two hundred, therefore, three fifty is
the residual that was somewhat oral.
Shemesh Dep. at 59:11-25.
It appears that Shemesh believed that Sun agreed to pay
Excelsior $250K, as documented in the Agreement ¶ 4B, App. B, and
that Sun further committed orally to provide the additional $350K
that Shemesh required. This, however, is at odds with the merger
clause in ¶ 27 of the Agreement, Further, Sun's Lea Sekowski
("Sekowski"), the credit department supervisor, declared that
after Shemesh signed the Agreement, "[Shemesh] unilaterally
deducted $200,000 from invoices that were outstanding at the
time." Sekowski Decl. ¶ 9. This was, in essence, a de facto
payment of the business incentive dollars, something that is
confirmed by correspondence from Sun's regional manager to
Shemesh. Id., Ex. 4. Sekowski further declared that "Sun ? did
not, at any time, agree to give `partial compensation' to
Excelsior for any alleged `improper billing practices as Mr.
Shemesh claims. . . ." Id. ¶ 10. Further, there is no
documentation to support that there was any such agreement at the
time Shemesh purchased Excelsior or that Sun agreed to pay any
money to the defendant. When we add to this that Shemesh
consulted for Excelsior as early as 1999 and thus was obviously
knowledgeable about the Sun-Excelsior relationship, Shemesh's
claim is both incredible and legally deficient. In sum, there are
no material issues of fact with respect to Excelsior's liability on Sun's breach of contract claims for the
amounts due on the unpaid invoices and the return of the
unamortized portion of the business incentive payment.
Excelsior argues that it should not have to forfeit the ink
dispensing equipment when Sun failed to abide by its commitment
to upgrade and service the machinery. Nonetheless, the parties
previously agreed that in the event of early termination with
no reference to the reason for such termination or the
performance of either party Excelsior would forfeit the
equipment to Sun. Excelsior's arguments to the contrary are
simply untenable in light of the clear contractual language. For
example, Shemesh testified that he previously refused to return
the ink dispensing equipment to Sun because "it's disputed that
it belongs to Sun . . . the equipment was fully depreciated and
should have remained in the possession of Excelsior." Shemesh
Dep. at 262:16-20. As for the basis of Excelsior's claim to the
equipment, Shemesh explained, "[m]y definition, okay, my
interpretation . . . that the equipment belonged to Excelsior."
Id. at 263:13-15. Unfortunately, it is not Shemesh's definition
that governs here; the parties are bound by their prior
contractual agreement. Under New Jersey law, as elsewhere, "the
parties are entitled under the provisions of the contract to that
which they bargained to receive." Traurig v. Levin, 142 A. 48,
49 (N.J. Err. & App. 1928). Here, the contractual language could
not be clearer. The equipment was "Property of Sun . . ." and
secured by a UCC financing statement. Agreement ¶ 7. Ownership of
the equipment would only vest in Excelsior upon completion of the
three-year contract. There is no material issue of fact to
obscure the obvious: Sun is entitled to return of the equipment
or an appropriate amount of damages.
E. Attorneys' Fees & Costs
Although "New Jersey has a strong policy disfavoring shifting
of attorneys' fees . . . a party may agree by contract to pay
attorneys' fees." N. Bergen Rex Transp., Inc. v. Trailer Leasing
Co., a Div. of Keller Sys., Inc., 158 N.J. 561, 569 (1999).
Here, Sun seeks an award of attorneys' fees and costs based on
the fact that its invoices, which indicated the transactions
documented therein were "subject to all terms and conditions
appearing both on the face and on the backer hereof," provide,
inter alia, that the "[c]ustomer shall also reimburse Sun for
any costs and expenses, including attorney fees, incident to the
collection of any delinquent account." Mallon Decl., Ex. B, C.
Sun believes that this language entitles it to collect attorneys'
fees and costs. The Agreement has no provision regarding attorneys' fees or costs. However, the merger
clause in ¶ 27 appears to authorize such an award. The second
portion of ¶ 27 provides, in pertinent part, that:
Shipments made by Sun Chemical shall also be made in
accordance with Sun['s] . . . standard general
conditions. These conditions are printed on the back
of Sun['s] invoices. These terms and conditions shall
apply to all orders and sales unless they are in
conflict with a specific term of this Agreement, in
which case the Agreement shall control.
As there is no specific provision in the Agreement to contradict
the liability for attorneys' fees and costs and Sun incurred
these amounts in the collection of a delinquent debt, an award of
attorneys' fees and costs is required.
F. Pre-Judgment Interest
Under New Jersey law, "[i]t is settled that prejudgment
interest may be awarded on contract claims." Meshinsky v.
Nichols Yacht Sales, Inc., 110 N.J. 464, 478 (1988). As Sun
acknowledges, an award of pre-judgment interest is generally
subject to equitable principles to be exercised in the Court's
discretion. E.g., Bak-A-Lum Corp. of Am. v. Alcoa Bldg.
Prods., Inc., 69 N.J. 123, 131 (1976) ("Interest . . . run[s] . . .
in accordance with principles of equity.") (internal
quotation mark and citation omitted); George H. Swatek, Inc. v.
N. Star Graphics, Inc., 246 N.J. Super. 281, 288 (N.J.Super.
A.D. 1991) (prejudgment interest can be awarded whether either
liquidated or unliquidated damages are recovered and the equities
are in the injured party's favor."). As one court observed,
"prejudgment interest has been regarded by [New Jersey] courts as
compensatory to indemnify the plaintiff for the loss of what
the monies due him would presumably have earned if payment had
not been refused." A.J. Tenwood Assoc. v. Orange Senior Citizens
Housing Co., 200 N.J. Super. 515, 525 (N.J.Super. A.D. 1985).
"The basic consideration is that the defendant has had the use,
and the plaintiff has not, of the amount in question; and the
interest factor simply covers the value of the sum awarded for
the prejudgment period during which the defendant had the benefit
of monies to which the plaintiff is found to have been earlier
entitled." Id. at 525-26.
Here, the parties contractually agreed that in the even of a
default in payment, Excelsior would pay Sun interest on the sums
due. Agreement ¶ 4A (providing that interest would accrue in the
lesser amount of 1% per month or the maximum allowed by law).
Excelsior must therefore pay such interest. As the New Jersey
Supreme Court held, a party that has contractually agreed to pay
pre-judgment interest "must be required to comply with its
contractual obligations." Van Note-Harvey Assoc., P.C. v.
Township of E. Hanover, 175 N.J. 535, 542 (2003); see also
Alliance Elec., Inc. v. Atlantic City Bd. of Educ., No.
A-633-01T2, 2004 WL 583211, at *17-18 (N.J.Super. A.D. March 2, 2004) (affirming an award of pre-judgment interest
because, inter alia, the contract provided for the imposition
of pre-judgment interest). Thus, the contractual language
requires an award. Moreover, the equities in this case are not as
one-sided as Excelsior would have us believe. It is undisputed
that Excelsior failed to pay any invoices since it entered into
the Agreement in May 2003 and it has enjoyed the benefit of that
money since that time. And while Excelsior may have had
legitimate gripes with Sun's performance, at no time did it
adhere to the agreed upon protocol to resolve those issues.
Instead, Excelsior seems to believe that Sun's partial
performance entitled it to forgo payment and avoid all
detrimental consequences of its own breach.
For the foregoing reasons, Sun's motion for summary judgment is
granted with respect to liability. The Court will hold an inquest
on February 8, 2005 at 10:00 AM to determine the amount of (1)
damages (each item of proposed damage is to be identified and
analyzed); (2) pre-judgment interest (identify and support
starting date); (3) attorneys' fees (time sheets and affidavits
required); and (4) costs (to be supported in concert with what
courts have allowed and for which the Federal and Local Rules
provide). The parties' submissions with respect to the inquest
are to be exchanged between the parties and delivered to Chambers
on or before February 2, 2005. The Clerk of the Court is
instructed to close this motion.