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.

New Yuen Fat Garments Factory Limited v. August Silk

June 1, 2009

NEW YUEN FAT GARMENTS FACTORY LIMITED, PLAINTIFF,
v.
AUGUST SILK, INC., AND DIRECT APPAREL SOURCING, INC., DEFENDANTS.



The opinion of the court was delivered by: John F. Keenan, United States District Judge

MEMORANDUM OPINION & ORDER

Before the Court is Plaintiff New Yuen Fat Garments Factory Limited's ("New Yuen") motion for an order pursuant to Rule 15 of the Federal Rules of Civil Procedure granting New Yuen leave to amend its complaint. Defendants August Silk Inc. ("August Silk") and Direct Apparel Sourcing, Inc., ("Direct") oppose the motion. For the reasons set forth below, the motion is granted.

I. BACKGROUND

This case arises out of a contract dispute among New Yuen, a manufacturer of athletic apparel organized under the laws of Hong Kong; Direct, an apparel retailer and importer incorporated in Delaware; and August Silk, an apparel retailer also incorporated in Delaware.

A. Initial Complaint

On September 24, 2007, New Yuen filed its initial complaint, which set forth the following allegations: On or about September 1, 2003, New Yuen and Direct entered into four contracts for the manufacture and delivery of apparel by New Yuen for Direct. The first contract ("Contract 1") required Direct to pay New Yuen $136,842.00; the second ("Contract 2"), $4,185.00; the third ("Contract 3"), $162,978.60; and the fourth ("Contract 4"), $50,706.00. New Yuen fulfilled its obligations under all four contracts, but never received payment from Direct. The initial complaint also alleged, in the alternative, that Contracts 1, 2, 3, and 4 were between New Yuen and August Silk; that August Silk entered the agreements either directly or through its agent, Direct; and that New Yuen never received payment from August Silk.

New Yuen set forth six causes of action: (1) breach of contract and (2) unjust enrichment claims against Direct predicated on all four contracts; (3) breach of contract and (4) unjust enrichment claims against August Silk predicated on all four contracts; (5) a cause of action entitled "August [Silk] contracted with New Yuen by its agent Direct" (Compl. 9); and (6) a cause of action entitled "New Yuen was the intended third-party beneficiary of August[] [Silk's] contract with Direct," (id.).

August Silk answered the initial complaint on October 30, 2007, and Direct did the same on April 29, 2008. Defendants have asserted counterclaims, generally alleging that New Yuen failed to perform under the contracts. On December 7, 2007, the Court entered a scheduling order, setting a May 1, 2008, deadline to amend pleadings and referring the matter to a magistrate judge for discovery supervision.

B. Discovery

During discovery, New Yuen learned facts that (1) changed New Yuen's understanding of Contract 4 and (2) allegedly indicate that August Silk tortiously interfered with New Yuen's contracts with Direct.

1. Contract 4

In the initial complaint, New Yuen alleged that Contract 4 was between New Yuen and Direct or, alternatively, New Yuen and August Silk and that it was an agreement to pay New Yuen $50,706.00 for the manufacture and delivery of apparel. According to New Yuen, testimony at the deposition of Karvin Li ("Li"), New Yuen's principal, revealed that the contract was in fact only between New Yuen and August Silk. (See Decl. of Peter Sverd at Ex. I 91:16-92:18.) New Yuen further claims that Li's testimony indicated that Contract 4 essentially contained two agreements: (1) that August Silk would purchase one last container of apparel from New Yuen by wiring $40,000 and then an additional $10,000 ten days later, and (2) that August Silk would pay all outstanding debts arising from Contracts 1, 2, and 3, while receiving a $0.40 discount per garment. (See id.) Li purportedly memorialized this agreement in a February 8, 2004, e-mail to Benedict Chan ("Chan"), August Silk's chairman. (Id. at Ex. J.)

2. Tortious Interference

According to New Yuen, information learned during discovery and gleaned from August Silk's answer and alternative counterclaims suggests that August Silk tortiously interfered with the contracts between New Yuen and Direct. First, New Yuen points to allegations in August Silk's answer and alternative counterclaims as demonstrating that August Silk was aware that New Yuen and Direct had contracted together, a necessary element to a tortious interference claim. (See id. at Ex. B ¶¶ 155, 156, 157, 163.) Second, New Yuen claims Chan's testimony at his October 22, 2008, deposition proves August Silk induced Direct to breach its contract with New Yuen. Chan's testimony suggested August Silk and Direct had agreed that August Silk would not fund a letter of credit it had transferred to Direct and that was ultimately intended for New Yuen to pay for apparel under Contracts 1, 2, and 3. Finally, during discovery, New Yuen learned that Defendants executed mutual releases of liability in mid-May 2004 (id. at Ex. H), and that, in a letter sent that same month, Direct agreed to indemnify August Silk from any claim brought by New Yuen arising out of the transactions at issue in this case (id. at Ex. G).

C. Proposed Amended Complaint

Plaintiff now asks the Court's permission to file an amended complaint in light of facts learned during discovery. The proposed amended complaint redefines Contract 4 as an agreement between New Yuen and August Silk to settle outstanding payments for Contracts 1, 2, and 3, and as an agreement by August Silk to pay New Yuen a total of $50,000 for a final container of apparel. The proposed amended complaint alleges that August Silk paid the initial $40,000 for the last container of apparel, but never paid the remaining $10,000, and further alleges that August Silk never paid the discounted outstanding balance of $304,005.60 on Contracts 1, 2, and 3. These amendments have the practical ...


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.