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Italverde Trading, Inc. v. Four Bills of Lading Numbered LRNNN 120950

April 10, 2007

ITALVERDE TRADING, INC. AND DELVERDE, SPA, PLAINTIFFS,
v.
FOUR BILLS OF LADING NUMBERED LRNNN 120950, LRNNN 122950, LRNN 123580, AND MSLNV 254064 AND SAVINO DEL BENE USA, INC., DEFENDANTS.



The opinion of the court was delivered by: Garaufis, United States District Judge

MEMORANDUM & ORDER

This civil action involves a dispute between Plaintiff Delverde, SpA ("Delverde"), a pasta manufacturer, Plaintiff Italverde Trading, Inc. ("Italverde"), Delverde's subsidiary and exclusive United States distributor, and Defendant Savino del Bene USA, Inc. ("Defendant" or "Savino"), Delverde's freight forwarder and customs broker. The instant dispute arose when Savino seized Delverde pasta and sold it in the United States, ostensibly for the purpose of recovering a debt Delverde owed to Savino's subsidiary. Delverde and Italverde allege that Savino's seizure and sale of the pasta was tortious. At this time, Delverde and Italverde move for summary judgment on the first, third, fifth, and sixth claims in the Complaint and Savino moves for summary judgment on the first, third, fourth, and sixth claims in the Complaint. For the reasons described below, Plaintiffs' and Savino's motions are denied.

I. Factual Background

Before setting forth the relevant facts, I note that when deciding a motion for summary judgment, this court must view the evidence in the light most favorable to the non-moving party and must draw all permissible inferences from the submitted affidavits, exhibits, interrogatory answers, and depositions in favor of that party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Vann v. City of New York, 72 F.3d 1040, 1048-49 (2d Cir. 1995). Even in a fact-intensive case, however, the court will not accept as fact mere allegations lacking evidentiary support. Abdu-Brisson v. Delta Air Lines, 239 F.3d 456, 466 (2d Cir. 2001).

The Parties

Plaintiff Delverde is an Italian corporation located in Cheiti Province, Italy that manufactures pasta and, often through subsidiaries, sells pasta in a number of countries, including the United States. (Plaintiff[s'] Statement of Material Facts as to Which No Genuine Issue Exists ("Pl. 56.1") ¶ 1; Defendant's Rule 56.1 Statement ("Def. 56.1") ¶¶ 1, 2.) Delverde owns the Delverde brand trademark. (Pl. 56.1 ¶ 1.) Italverde is a United States corporation located in Rutherford, New Jersey that is a wholly owned subsidiary of Delverde. (Id. ¶ 2.) Italverde is the exclusive distributor of Delverde brand pasta in the United States and the U.S. licensee of the Delverde brand trademark. (Id. ¶ 2.)

Savino del Bene USA, Inc. ("Savino") is a New York corporation with its principal place of business in Jamaica, New York. (Def. 56.1 ¶ 3.) Savino del Bene SpA ("Savino Italy") is an Italian-based company that is a subsidiary of Savino. (Id. ¶¶ 4-5.) Both Savino and Savino Italy provide freight-forwarding services and Savino is a licensed United States customs broker. (Id. ¶¶ 6-7.) In or around April, 2001, Delverde retained Savino Italy to forward shipments of Delverde pasta to Italverde and retained Savino as its customs broker. (Id. ¶ 8.)

Relationship Between Delverde/Italverde

Delverde and Italverde entered into a written agreement titled Agreement Regarding Purchase of Products and Related Matters dated December 12, 2002 ("Purchase Agreement"). Paragraph 5 of the Agreement states:

The Seller and Italverde hereby agree that title to, and the risk of loss of theft, damage or destruction to the Products shall remain with the Seller until due delivery and tender by the Seller of conforming Products to Italverde in the Territory, at the location designated by Italverde. (April 28, 2006 Affidavit of Matthew C. Mason ("Mason Aff.") Ex. F ¶ 5(g); Def. 56.1 ¶ 20; Plaintiffs' Response to Defendant's Rule 56.1 Statement ("Pl. 56.1 Resp.") ¶ 20.) The Agreement defines the term "Territory" as the Untied States, the Republic of Mexico, and "all of the countries of Central America and South America." (Mason Aff. Ex. F ¶ 5(e).)

The agreement also provides that the "parties may amend, modify and supplement this Agreement only by a written instrument executed by all of the parties hereto with the same formality as this Agreement." (Mason Aff. Ex. F ¶ 8(c).)

The Italian Litigation

On March 10, 2004, the Civil Court of Florence, Italy issued an ex parte Order directing Delverde to pay Savino Italy 604,818.06 euros plus costs and interest. (Pl. 56.1 ¶ 4; Def. 56.1 ¶ 9.) The Florence Court's Order provided "that within 40 (forty) days of the date of service of this official document a challenge may be filed in the form required by law and, if no challenge is filed, the Court will proceed with the enforcement." (Pl. 56.1 Ex. A.) Savino Italy did not serve the Order until April 9, 2004, approximately 30 days after the order was issued. (Pl. 56.1 ¶ 4; Defendant Savino Del Bene USA, Inc.'s Response to Plaintiffs' Statement of Material Facts as to which No Genuine Issue Exists ("Def. 56.1 Resp.") ¶ 4.) On May 13, 2004, Savino Italy requested and obtained an Order from the Florence Civil Court authorizing a Judicial Officer to seize assets of Delverde which were in the possession of Savino Italy. (Pl. 56.1 ¶ 5; Def. 56.1 Resp. ¶ 5.)

On May 21, 2004, Delverde filed an ex parte motion in the Civil and Criminal Court of Cheiti, Italy, requesting the Court to enjoin any effort to enforce the March 10 Florence Court Order. (Pl. 56.1 ¶ 6; Def. 56.1 Resp. ¶ 6.) The Cheiti Court issued an order prohibiting Savino Italy "from [engaging in] any and all enforcement activities" relating to the March 10 Florence Court Order. (Pl. 56.1 ¶ 6, Ex. C; Def. Resp. ¶ 6.) The parties dispute whether the Cheiti Court Order is valid. Savino asserts that the Cheiti Court Order is the product of Delverde's forum shopping and that, because Delverde failed to obtain the Order from the Florence Civil Court, it is invalid. (Def. 56.1 Resp. ¶ 6.)

On June 3, 2004, a Judicial Officer of the Florence Court of Appeals performed an official seizure of specific goods and "enjoin[ed] the debtor [Delverde] from any action aimed at removing. . . . the [specific] movable goods from the creditor [Savino Italy]." (Pl. 56.1 ¶ 7, Ex. D; Def. 56.1 Resp. ¶ 7.)

On June 30, 2004, the Cheiti Court confirmed its May 28 Order and enjoined any and all enforcement of the Florence Court's March 10 Order. (Pl. 56.1 ¶ 8, Ex. E; Def. 56.1 Resp. ¶ 8.) Although the June 30 Order is not entirely clear, it appears to find that the Florence Civil Court lacked the jurisdiction or authority to have issued the March 10 Order. (Pl. 56.1 ¶ 8, Ex. E.) Savino disputes the validity of the Cheiti Court's June 30 order. (Def. 56.1 Resp. ¶ 8.) On July 8, 2004, Savino Italy withdrew the June 3 enforcement action filed in the Florence Civil Court. (Pl. 56.1 ¶ 9; Def. 56.1 Resp. ¶ 9.) Savino denies that the withdrawal implies that the Florence Court proceeding or related orders were invalid. (Def. 56.1 Resp. ¶ 9.)

After the Florence Civil Court issued the March 10 Order, Savino Italy assigned to Savino its interest in the debt that was the subject of the March 10 Order. (Pl. 56.1 ¶ 10; Def. 56.1 Resp. ¶ 10.) At no time did Savino seek to have the Florence Court Order recognized by a court in the United States. (Pl. 56.1 ¶¶ 19, 21; Def. 56.1 Resp. ¶¶ 19, 21.)

Savino Seizes and Sells the Pasta

At the time of the Italian litigation, Savino had physical possession of various shipments of Delverde-brand pasta. (Pl. 56.1 ¶ 10; Def. 56.1 Resp. ¶ 10.) Although the parties agree that Savino was holding the pasta in its capacity as customs broker for at least some portion of this time, it is not clear whether either Savino or Savino Italy (or both) were serving as Plaintiffs' freight forwarder. (See June 15, 2006 Affidavit of Matthew C. Mason In Opposition To Plaintiffs' Motion for Summary Judgment ("Mason Opp. Aff.") Ex. B (document that appears to be freight forwarding contract).)

Between May and June 2004, Savino Import Manager Marco Sigrist informed Italverde that Savino would not release certain containers of pasta in its possession. (Pl. 56.1 ¶ 11; Def. 56.1 Resp. ¶ 11.) Savino asserts that it then offered to sell the pasta in its possession to Italverde upon full payment of the full commercial invoice amount or posting a letter of credit. (See Def. 56.1 ¶ 12.) However, Plaintiffs have not admitted this allegation. (See Pl. 56.1 Resp. ¶ 12.) On June 15, 2004, Delverde revoked Savino's Power of Attorney over the pasta containers in Savino's possession. (Pl. 56.1 ¶ 15; Def. 56.1 Resp. ¶ 16.) This Power of Attorney authorized Savino to serve as the customs broker for the pasta. (Mason Opp. Aff. ¶ 6, Ex. D.)After this revocation, Savino substituted itself as importer of record on official government documents for at least some of the pasta shipments in its possession. (Pl. 56.1 ¶ 15; Def. 56.1 Resp. ¶ 15.)

At some point, Sigrist began contacting the persons who had ordered the pasta and who were identified on the commercial invoices as the purchasers of the pasta in Savino's possession. (Pl. 56.1 ¶ 12; Def. 56.1 Resp. ¶ 12; Def. 56.1 ¶ 13; Pl. 56.1 Ex. N ("Sigrist Dep.") at 25-28.) Plaintiffs assert that this occurred on or about June 9, 2004 and Savino states that this occurred some time after Savino Italy assigned whatever rights it had in the pasta to Savino.*fn1 (Pl. 56.1 ¶ 12; Def. 56.1 Resp. ¶ 12; Def. 56.1 ¶ 13.) Sigrist provided customers copies of the Florence Court's March 10 Order and described the Order to one or more customers as the "sentence" of the Italian court. (Pl. 56.1 ¶ 13; Def. 56.1 Resp. ¶ 13.) In a telephone conversation with Columbus Foods, without Columbus Foods having raised the issue of future pasta shipments, Sigrist went out of his way to state that "I was not in any way interested in doing any function in terms of providing additional pasta." (Sigrist Dep. at 28.)

Italverde also asserts that, when Savino would contact its customers, it would "threaten[] to dump the product on the market and ruin [the customers]." (Pl. 56.1 Ex. T ("Schettini Dep.") at 84-85.) Italverde President Francesco Schettini described Savino's approach to negotiating sales of the pasta: "If he doesn't buy it, Marco [Sigrist] said, I have to sell this product. If you don't buy it, I am going to dump the product on the market and your market is going to be ruined. Dump meaning underprice, undercost." (Id. at 85.) In fact, at least one of Italverde's customers, Musco, purchased pasta from Savino that it did not even need and then re-sold it to Italverde. (Id. at 90-91.) This purchase and re-sale may have been for the purpose of preventing Savino from selling the pasta for less than the fair market value.*fn2

Between May and August 2004, Savino sold some of the containers of pasta that were in its possession. (Pl. 56.1 ¶ 16; Def. 56.1 ¶ 16.) Seven of the pasta containers were sold by Savino directly to Italverde and eight containers were sold to customers of Delverde/Italverde. (Def. 56.1 ¶ 18; Pl. 56.1 ¶ 18.) Italverde President Francesco Schettini confirmed to Delverde/Italverde customers that Savino was in possession of actual Delverde-brand pasta and advised at least some customers to purchase the pasta from Savino. (Def. 56.1 ¶ 17; Pl. 56.1 Resp. ¶ 17.)

Plaintiffs allege that Savino continued to contact at least one of its customers-Columbus Foods-on July 29, after Savino had already sold all of the Delverde pasta it had seized to Plaintiffs' customers and Italverde. (See Pl. 56.1 ¶ 18, Ex. P; Def. 56.1 ¶ 18.) Specifically, Plaintiffs assert that Savino directed Savino employee Marco Sigrist "to sell the pasta to any supermarket at any price." (Id.)

Plaintiffs assert that Savino's conduct caused them to suffer damages. Plaintiffs claim that Savino sold the pasta to Plaintiffs' customers at a price that was lower than the price at which the customers had agreed to purchase the pasta. (June 15, 2006 Affidavit of Joseph Sellitto ("Sellitto Aff.") at pages 3-4.*fn3 ) By doing so, Savino effectively deprived Italverde of the mark-up that it was charging its customers. Further, in effecting the sales, Savino allegedly disclosed to Plaintiffs' customers the price at which Italverde was purchasing the pasta from Delverde, which was lower than the price Plaintiffs had been quoting to their customers. (Id.)

Plaintiffs also allege that Savino's seizure of the pasta caused delays in the delivery of the pasta to Plaintiffs' customers. As a result of these delays, Plaintiffs assert that they lost customers. (Sellitto Aff. at pages 3-4.)

II. Legal Analysis

A. Summary Judgment Standard

Summary judgment is appropriate when "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law," Fed. R. Civ. P. 56(c), i.e., "[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party," Holtz v. Rockefeller & Co., Inc., 258 F.3d 62, 69 (2d Cir. 2001) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). "A fact is 'material' for these purposes if it might affect the outcome of the suit under the governing law. An issue of fact is 'genuine' if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Holtz, 258 F.3d at 69 (citations and quotation marks omitted).

The moving party bears the burden of establishing the absence of a genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). If the moving party has met this burden, then the non-moving party has the burden of "set[ting] forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e). "The non-movant cannot escape summary judgment merely by vaguely asserting the existence of some unspecified disputed material facts, or defeat the motion through mere speculation or conjecture." W. World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir. 1990) (internal quotations and citations omitted); see also Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998). Rather, the non-movant can create a genuine issue of material fact only by citing competent, admissible evidence. Glasso v. Eisman, Zucker, Klein & Ruttenberg, 310 F. Supp. 2d 569, 574 (S.D.N.Y. 2004) (citing Sarno v. Douglas Elliman-Gibbons & Ives, 183 F.3d 155, 160 (2d Cir. 1999)).

B. Choice of Law

The parties have not briefed the choice of law issue. This court possesses pendent jurisdiction and diversity jurisdiction over the first, third, fourth, and fifth claims in the Complaint and, as a result, applies the choice of law doctrine of the forum state, New York. See Am. Fuel Corp. v. Utah Energy Dev. Co., 122 F.3d 130, 134 (2d Cir. 1997) ("In a diversity case, we apply the choice of law rules of the forum state-in this case New York-to determine what law governs" the issues arising under state law); Rogers v. Grimaldi, 875 F.2d 994, 1002 (2d Cir. 1989) ("A federal court sitting in diversity or adjudicating state law claims that are pendent to a federal claim must apply the choice of law rules of the forum state."). Accord Access 4 All, Inc. v. Trump Int'l Hotel and Tower Condominium, No. 04-CV-9497, 2007 WL 633951, at *3 (S.D.N.Y. Feb. 26, 2007).

With respect to all but one of the legal issues presented by the first, third, fourth, and fifth claims, the parties agree that New York law applies. The parties' consent to the application of New York law disposes of the choice of law question. British Int'l Ins. Co. v. Seguros La Republica, S.A., 342 F.3d 78, 81 (2d Cir. 2003) ("the parties agree that New York law governs this case; their consent concludes the choice of law inquiry") (internal quotation omitted).

The parties do not consent to the application of New York law to the construction of the Purchase Agreement between Delverde and Italverde. As discussed below, New Jersey law governs the construction of the Purchase Agreement. With respect to all other legal issues presented by the first, third, fourth, and fifth claims, upon the consent of the parties, the court will apply New York law.

The sixth claim arises under federal law and, as a result, federal law applies.

C. Conversion

Italverde and Savino each asserts that it is entitled to summary judgment on the first claim for conversion. For the reasons ...


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