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Lance International, Inc. v. First National City Bank

April 6, 2009


The opinion of the court was delivered by: Arthur F. Engoron, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the printed Official Reports.

Upon the foregoing papers, it is hereby ordered that defendant's motion is granted and plaintiff's motion is denied.

Brief Factual Background of Underlying Controversy

The instant case arises out of World War II, when Japanese soldiers tunneled under a certain area of Okinawa in defense of their homeland. Some 20 years later, in or about 1962, pursuant to Contract DA-328-ENG-619, the United States Department of the Army Corps of Engineers hired Peterson Sharpe Engineering Corporation ("Peterson"), of Nevada, to build junior and senior high schools in this same area. Peterson had a wholly-owned subsidiary named Construction Services Corporation, Ltd. ("Construction"), of Hong Kong, that acted as Peterson's "purchasing agent." In or about 1963, plaintiff Lance International Inc. ("Lance"), of New York, agreed to sell certain building materials to Construction. According to plaintiff, defendant The First National City Bank (now known as "Citibank") acted as plaintiff's "collection agent," obligating itself to forward to plaintiff moneys due from Construction.

Unfortunately for all concerned, the tunnels proved to be a significant impediment to the construction. As progress slowed, so did payments from the government.

The Parties' Basic Contentions

The gist of plaintiff's complaint is that it shipped the building materials; that Construction received them; that defendant received, or was able to receive, payments for the goods; but that defendant failed to transmit these payments to plaintiff. The gist of the defense is that plaintiff had agreed to extend a 90-day credit to Construction; that plaintiff agreed to accept the risk of non-payment; that due to the construction delays defendant never received full payment; and that defendant remitted to plaintiff whatever was due pursuant to the parties' agreement and the custom and practice in the industry at the time.

Abbreviated Procedural History

Plaintiff first sued defendant in Supreme Court, New York County, in or about 1966. In or about 1969, after some initial legal skirmishing, plaintiff served the instant complaint. In or about 1971, after further legal skirmishing, defendant served the instant answer. At some point in or about the early 1970's, plaintiff partially deposed an employee of defendant. In or about 1988, two status conferences were held and some disclosure was conducted. In or about 1994, the case was transferred, pursuant to CPLR 325(d), to this court. In or about the mid-1990's, the parties litigated disclosure issues; defendant's answer was conditionally stricken but never absolutely stricken. Although the foregoing is not a complete history, clearly the case has lain fallow for years on end.

In or about 2007, plaintiff's counsel filed a Notice of Trial. On or about July 21, 2008, defendant moved for summary judgment. Today's decision renders the summary judgment motion, which is the subject of a separate, contemporaneous decision, moot.

Plaintiff's Corporate History

Plaintiff was incorporated in New York in or about 1959. From its inception to the present, or whenever it ceased to exist (infra), Albert M. Hochstadt ("Hochstadt") has been its president, principal and driving force. In or about 1965, "Lance filed Chapter XI and basically ceased operations." Hochstadt Deposition of 5/18/89, at 38 (Nelson Moving Affirmation Exh. D). Furthermore, "when Lance went into Chapter XI reorganization, it ceased its operations. It did not continue the business it did before and while it did various business activities from time to time, we never went back into the export business." Id. at 58.

By Southern District of New York Bankruptcy Court order dated December 8, 1965 (Cross-Moving Exh. F), plaintiff was permitted to retain Robert D. Witte, Esq. "as special counsel" to prosecute the instant case, and his contingency fee was not to exceed 25% of any recovery.

In a proposed "Amended Plan of Arrangement," dated March 21, 1967 (Cross-Moving Exh. C), Hochstadt stated as follows: "The debtor shall pay over, pro rata, to its general creditors [some 33 in number] . . . ten (10%) per cent of the net proceeds of any recovery, by judgment, settlement or otherwise, from [the instant action]." This proposal was accepted in a bankruptcy court Order Confirming Amended Arrangement dated 9/17/67 (id.). However, as noted by plaintiff (Brief for ...

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