Searching over 5,500,000 cases.


searching
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.

United Natural Foods, Inc. v. Burgess

May 21, 2007

UNITED NATURAL FOODS, INC., PLAINTIFF,
v.
HELENE BURGESS, DEFENDANT.



MEMORANDUM OPINION AND ORDER

In this diversity action, plaintiff, United Natural Foods, sues defendant Helene Burgess for breach of contract. Plaintiff's claim arises out of Burgess's personal guaranties of payment on future invoices for goods shipped by plaintiff to two Healthy Pleasures grocery stores previously owned by Burgess. Burgess moves for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure dismissing the complaint. She argues that neither her nor her authorized agent signed the guaranties, that the guaranties were not signed in a personal capacity, and that the guaranties were discharged by an alteration of the obligations of the stores. For the reasons that follow, Burgess's motion is GRANTED.

BACKGROUND

Until November 2003, Burgess owned three Healthy Pleasures grocery stores (each separately incorporated as "93 University Place Corp.," "489 Broome Street Corp.," and "2493 Broadway Corp." and discussed hereinafter as the "University Place store," the "Broome Street store," and the "Broadway store,"). (Burgess Decl. ¶ 2.)

While each store was named Healthy Pleasures, all three stores were separately incorporated and separately responsible for their own obligations. (Id.; Anesta Tr. 96:16--98:5.) Plaintiff is a distributor of natural foods and related products. In May 1998, plaintiff faxed "Credit Applications" containing personal guaranty language to the University Place and Broome Street stores (together, the "guaranteed stores"). (Ramdass Tr. 28:10--13.) These applications were filled out with Burgess's name, social security number, address, phone number, and purported signature, and returned to plaintiff. (Weiss Decl. Exs. 4, 5.) The credit application for the Broadway store, which opened later, was executed in December 2001 and signed by Bashar Omar, who was then its manager. (Weiss Decl. Ex. 6.)

Immediately preceding the signature line of each credit application are two paragraphs. The first reads in part: "My/our signature attests financial responsibility, ability, and willingness to pay each invoice within the terms specified. I/we agree to pay all collection costs incurred, including reasonable attorney fees, agency fees and court costs, in the event this account is referred for collection. I, the undersigned, am authorized to bind my company for any and all credit under the terms of this application." The second paragraph, under the heading "GUARANTY" reads: "In order for United Natural Foods, Inc. to extend credit to the Credit Application supplied, and in consideration thereof, receipt which is hereby acknowledged, the undersigned jointly and severally guarantee payment on each invoice and the performance of all terms and conditions of this Credit Application. This is a continuing guaranty and shall remain in full force until written notice of revocation is received and acknowledged by United Natural Foods, Inc." The paragraph concludes with a line that reads "Executed by the undersigned Guarantor(s) this _____ day of _____, 19___." This line is not filled in on either credit application for the guaranteed stores.

Directly below the execution line for the guaranteed stores' credit applications is a signature that reads "Helene Burgess" on the line designated "Customer Signature." Burgess contests the authenticity of the signature, and her former bookkeeper, Angela Ramdass, while not specifically recalling signing the credit applications, was "positively certain" that the handwriting was her own and not that of Burgess. (Burgess Decl. ¶ 3; Ramdass Tr. 36:11--37:22.) While plaintiff argues that it had no reason to question the authenticity of the signature, and that it would have "been highly unusual" for Burgess not to review the documents, it offers no evidence to suggest that the signature was in fact that of Helene Burgess. (See Pl.'s Rule 56.1 Statement ¶ 6.)

The parties further dispute whether Burgess had authorized the signing of the credit application. Burgess declared that she did not authorize Ramdass to sign her name to the personal guaranty. (Burgess Decl. ¶ 4.) However, Ramdass stated at her deposition that she knew the applications needed a signature because they needed a personal guaranty, that Burgess was aware she was signing her name to the documents, and that she was authorized to sign Burgess's name to the documents. (Ramdass Tr. 28:19--24, 41:4--12, 42:23--44:2.) Further, plaintiff contends that Burgess routinely instructed or authorized Healthy Pleasures employees to fill out and sign business and personal documents, even in her presence. (See Pl.'s Rule 56.1 Statement ¶¶ 9, 10.)

Pursuant to the credit agreements, plaintiff provided natural foods and related products to the Healthy Pleasures stores from 1998 through 2001, when the Broadway store opened, until 2003. During that period, the stores frequently failed to timely pay for the delivered goods. (Brahman Decl. ¶ 11.) By mid-2003, the three stores collectively owed plaintiff over two million dollars for goods delivered but not paid for. (Omar Decl. ¶ 4.) In the late summer and early fall of 2003, plaintiff threatened to sue all the stores for the unpaid balances, and discussions began as to extending the payment terms of the debt. (Id. ¶ 8.) On November 5, 2003, Burgess sold all her shares in the three stores to Omar. (Burgess Decl. ¶ 2.) Shortly thereafter, Omar closed the Broadway store because of a severely negative cash flow. By December 2003, plaintiff cut off shipments to the remaining stores due to the defaults on payment obligations, and only resumed shipping on the condition that plaintiff receive a certified check before it delivered goods. Negotiations about reforming the obligations of the stores continued in the hopes of keeping the remaining stores in business and avoiding litigation. Plaintiff sought a personal guaranty from Burgess as a precondition for altering the terms of the stores' obligations; Burgess repeatedly refused. (Townsend Tr. 78:9--13; Brahman Tr. 109--13.) Eventually, in January 2004, with Burgess's guaranty, plaintiff, Omar, and the three stores entered into a settlement agreement ("the Agreement"). (Weiss Decl. Ex. 10; Brahman Decl. ¶ 20.)

Pursuant to the Agreement, the debts of the three stores were consolidated into a single note (the "Note") for which each would be jointly and severally liable. It further provided that all payments received under that note would first be used to pay off the debt of the Broadway store, which had no positive cash flow as it had closed. Plaintiff never sought, nor obtained, Burgess's consent to any of the terms of the Agreement or note. (Burgess Decl. ¶ 5; Brahman Tr. 143:6--8.) The note, secured by an interest in the three stores, set forth terms of payment under which plaintiff would receive over two million dollars over the course of more than ten years. (Weiss Decl. Exs. 10, 11, 12.) However, the remaining two stores closed shortly after the Agreement was signed (due in part to the opening of a Whole Foods store nearby), with only a small fraction of the outstanding debt having been paid. (Brahman Decl. ¶ 22.) In June 2005, plaintiff brought suit against Burgess to recover for the obligations of the guaranteed stores.

STANDARD OF REVIEW

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). In reviewing the record, the district court must assess the evidence in "the light most favorable to the non-moving party," resolve all ambiguities, and "draw all reasonable inferences" in its favor. Am. Cas. Co. v. Nordic Leasing, Inc., 42 F.3d 725, 728 (2d Cir. 1994); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). The moving party must demonstrate that no genuine issue exists as to any material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323--25 (1986).

If the moving party makes such a showing, the "non-movant may defeat summary judgment only by producing specific facts showing that there is a genuine issue of material fact for trial." Samuels v. Mockry, 77 F.3d 34, 36 (2d Cir. 1996); Celotex, 477 U.S. at 322--23. An alleged factual dispute between the parties will not by itself defeat a motion for summary judgment, since "the requirement is that there be no genuine issue of material fact." Anderson, 477 U.S. at 247--48 (emphasis in original). Specifically, the non-moving party cannot rely on mere allegations, denials, conjectures or conclusory statements, but must present affirmative and specific evidence showing that there is a genuine issue for trial. See id. at 256--57; Gross v. Nat'l Broad. Co., 232 F. Supp. 2d 58, 67 (S.D.N.Y. 2002).

DISCUSSION

Burgess makes three independent arguments to support her motion for summary judgment: (1) neither her nor an authorized agent signed the credit application; (2) the application was not signed in a personal capacity; and (3) the Agreement discharged the guaranty of payments on the invoices of the guaranteed stores. While the Court finds a genuine issue of material fact exists as to the first two defenses, there is no genuine issue as to whether the ...


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.