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Westport Marina, Inc. v. Boulay

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK


March 24, 2010

WESTPORT MARINA, INC., D/B/A SHIPSTORE.COM; THE COAST DISTRIBUTION SYSTEM, INC.; KELLOGG MARINE, INC.; AND C.C. MARINE DISTRIBUTORS, INC. PLAINTIFFS,
v.
ADAM BOULAY; THE CLEAN SEAS COMPANY; ABC CORPS 1-10 (FICTITIOUS ENTITIES); AND JOHN DOES 1-10 (FICTITIOUS INDIVIDUALS) DEFENDANTS.

The opinion of the court was delivered by: Hurley, Senior District Judge

MEMORANDUM & ORDER

I. INTRODUCTION

Presently before the Court is a motion for summary judgment filed by defendant Clean Seas Company ("Clean Seas") pursuant to Federal Rule of Civil Procedure 56. Plaintiffs' Second Amended Complaint seeks recovery against Clean Seas on the following twelve counts:

(I) Breach of Contract, (II) Negligence, (III) Breach of Express Warranty, (IV) Breach of Implied Warranty of Merchantability, (V) Breach of Implied Warranty of Fitness for a Particular Purpose, (VI) Common Law Fraud, (VII) Negligent Misrepresentation, (VIII) Intentional Misrepresentation, (IX) Defective Product (Strict Products Liability), (X) Indemnity, (XI) Contribution, and (XII) Request for Attorneys' Fees and Costs. Clean Seas' motion for summary judgment targets all twelve counts. For the reasons stated below, Clean Seas' motion is GRANTED in part and DENIED in part.

II. FACTUAL BACKGROUND

The following facts are undisputed unless otherwise noted.*fn1 Clean Seas was a corporation incorporated under the laws of the State of Florida, with its only office in Jacksonville, Florida. (Def.'s Local Civ. R. 56.1 Statement of Undisputed Material Facts ("Def.'s 56.1") ¶ 1.) The product at issue in this case (the "Product") was marketed as an enzymatic boat coating designed to inhibit marine growth on boat bottoms. (Pls.' Resp. to Def.'s Local Civ. R. 56.1 Statement of Undisputed Material Facts ("Pls.' 56.1") ¶ 41.) The Product was designed and patented by Clean Seas, manufactured by Suntec, Inc., and sold and distributed to Plaintiffs by Dolphinite, Inc. ("Dolphinite") under Dolphinite's label as "Go Fast Bottom Paint" and "Go Fast Inflatable Bottom Coating." (Def.'s 56.1 ¶ 3.) The Product was manufactured beginning in February 2003 and was first received by end-user customers in or around March 2003. (Pls.' 56.1 ¶ 54.) By April 2003, Dolphinite and Clean Seas had begun to receive complaints regarding the effectiveness of the Product. (Pls.' 56.1 ¶ 55.) Dolphinite filed for bankruptcy in 2004 and is no longer conducting business. (Def.'s 56.1 ¶ 5; see also Pls.' Revised Decl. of Deps. Ex. A, Vol. 1, 16:17-20.) Clean Seas terminated its business operations in September 2005. (Def.'s 56.1 ¶ 4.)

Plaintiffs are wholesale distributors of marine products who sold the Product to retail distributors, who in turn sold the Product to end-user customers. (Def.'s 56.1 ¶ 6.) Plaintiffs do not allege that they suffered property damage as a result of applying the Product to boats owned by them. (Def.'s 56.1 ¶ 7.) Rather, Plaintiffs allege that the failure of the Product to perform as expected caused them to suffer economic losses in excess of $985,000. (Def.'s 56.1 ¶ 36; see also Second Am. Compl. 16-17.) Plaintiffs acknowledge that they are not parties to a contract with Clean Seas, either written or oral. (Pls.' Mem. in Opp'n to Mot. for Summ. J. 16.) Indeed, Plaintiffs had no direct contact with Clean Seas representatives prior to receiving complaints from end-user customers. (Def.'s 56.1 ¶¶ 13, 15, 20, 21, 22 & 27.)*fn2 Instead, Plaintiffs were introduced to the Product by and purchased the Product from Adam Boulay ("Boulay"), President and owner of Dolphinite. (Def.'s 56.1 ¶¶ 8, 18, 19 & 26.)

The labels on the Product did, however, include Clean Seas' logo and the notation, "With MET Inside," a reference to Clean Seas' patented enzymatic antifouling additive. (See Pls.' Revised Decl. of Documentary Exhibits Ex. 1, 2 & 5.) The labels also contained the following statements: "Keeps hull exceptionally clean from marine growth! Increase speed, Reduce drag, Maximize efficiency!" (Pls.' Revised Decl. of Documentary Exhibits Ex. 1.) Plaintiffs allege, inter alia, that "Clean Seas drafted, designed, and had final approval over . . . [all statements on the] labels." (Pls.' Mem. in Opp'n to Mot. for Summ. J. 9.) Plaintiffs further allege that they were merely passive parties in the supply chain and, as such, were guilty of no wrongdoing. (Pls.' Mem. in Opp'n to Mot. for Summ. J. 17-18.) Clean Seas acknowledges responsibility only for the application and storage instructions contained on the Product's labels and denies responsibility for the statements, "Keeps hull exceptionally clean from marine growth! Increase speed, Reduce drag, Maximize efficiency!" (Def.'s Resp. to Pls.' 56.1 ¶¶ 60 & 61.) Instead, Clean Seas asserts that Boulay, as president of Dolphinite and not at the direction of Clean Seas, was responsible for placing these sanguine statements on the labels. (See, e.g., Def.'s 56.1 ¶¶ 9 & 30.)

III. PROCEDURAL HISTORY

This action was originally filed in the United States District Court for the Northern District of New York, and later transferred to the Eastern District. Plaintiffs' original Complaint, filed in the Northern District on January 12, 2004, sought recovery against the following defendants: Dolphinite, Inc.; Adam Boulay; The Clean Seas Company; Brook Venture Fund, LP; Brook Venture Partners, LLC; Suntec Paint, Inc.; ABC Corps. 1-10 (fictitious entities); and John Does 1-10 (fictitious individuals). (See Compl.) The Northern District's docket sheet indicates that the action was terminated as against Dolphinite on June 2, 2004. On that date, Plaintiffs filed their First Amended Complaint, which omitted Dolphinite, an entity "now in bankruptcy," as a party. (First Am. Compl. 2.) The Northern District's docket sheet also indicates that the action was terminated as against Brook Venture Fund, Brook Venture Partners, and Suntec Paint on October 12, 2004. On that date, the Northern District granted Suntec Paint's motion to dismiss for lack of personal jurisdiction, and granted Brook Venture Fund and Brook Venture Partners' motions to dismiss for failure to state a claim. (See Ct.'s Order (Hurd, J.) at 1, Oct. 12, 2004; see also Tr. of Proceedings Before Hon. David N. Hurd, Nov. 1, 2004.) The Northern District's docket sheet further indicates that Plaintiffs moved for an entry of default against Boulay on November 18, 2004, and that the Clerk of the Court noted Boulay's default on November 19, 2004. (See Req. for Entry of Default, Nov. 18, 2004; Entry of Default, Nov. 19, 2004.) However, there is no indication that a default judgment was ever entered against Boulay.

Plaintiffs' Second Amended Complaint was filed in the Northern District on May 16, 2005, and seeks recovery against the following defendants: Adam Boulay; The Clean Seas Company; ABC Corps 1-10 (fictitious entities); and John Does 1-10 (fictitious individuals). (See Second Am. Compl.) The action was transferred to the Eastern District on September 21, 2006. (See Ct.'s Order (Hurd, J.) at 1-2, Sept. 21, 2006.)

IV. SUMMARY JUDGMENT STANDARD

Summary judgment pursuant to Federal Rule of Civil Procedure 56 ("Rule 56") is only appropriate where admissible evidence, in the form of affidavits, deposition transcripts, or other documentation, demonstrates both the absence of a genuine issue of material fact and one party's entitlement to judgment as a matter of law. See, e.g., Major League Baseball Props., Inc. v. Salvino, Inc., 542 F.3d 290, 309 (2d Cir. 2008); Viola v. Philips Med. Sys. of N. Am., 42 F.3d 712, 716 (2d Cir. 1994). The relevant governing law in each case determines which facts are material; "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see also SCR Joint Venture L.P. v. Warshawsky, 559 F.3d 133, 137 (2d Cir. 2009); Coppola v. Bear Stearns & Co., 499 F.3d 144, 148 (2d Cir. 2007). No genuine issue of material fact exists when the movant demonstrates, on the basis of the pleadings and submitted evidence, that no rational jury could find in the non-movant's favor. See, e.g., Warshawsky, 559 F.3d at 137; Chertkova v. Conn. Gen'l Life Ins. Co., 92 F.3d 81, 86 (2d Cir. 1996) (citing Fed. R. Civ. P. 56(c)). In deciding a summary judgment motion, a court must resolve all factual ambiguities and draw all reasonable inferences in favor of the non-movant. See, e.g., Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 57 (2d Cir. 1987).

To defeat a summary judgment motion properly supported by affidavits, depositions, or other documentation, the non-movant must offer similar materials setting forth specific facts that show there is a genuine issue of material fact to be tried. See, e.g., Rule v. Brine, Inc., 85 F.3d 1002, 1011 (2d Cir. 1996). The non-movant must present more than a "scintilla of evidence," Del. & Hudson Ry. Co. v. Cons. Rail Corp., 902 F.2d 174, 178 (2d Cir. 1990) (quoting Anderson, 477 U.S. at 252), or "some metaphysical doubt as to the material facts," Aslanidis v. U.S. Lines, Inc., 7 F.3d 1067, 1072 (2d Cir. 1993) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)), and "cannot . . . rely[] on the allegations in his pleading, or on conclusory statements, or on mere assertions that affidavits supporting the motion are not credible," Gottlieb v. County of Orange, 84 F.3d 511, 518 (2d Cir. 1996) (citations omitted). Affidavits submitted in opposition to a summary judgment motion must be based on personal knowledge, must "set forth such facts as would be admissible in evidence," and must show that the affiant is "competent to testify to the matters stated therein." Patterson v. County of Oneida, 375 F.3d 206, 219 (2d Cir. 2004) (citing Fed. R. Civ. P. 56(e)).

When determining whether a genuine issue of material fact exists, "a trial judge must bear in mind the actual quantum and quality of proof necessary to support liability." Anderson, 477 U.S. at 254-55. A court considering a summary judgment motion must be "mindful of the underlying standards and burdens of proof" because the evidentiary burdens that the respective parties would bear at trial guide the court in its determination of a summary judgment motion. Pickett v. RTS Helicopter, 128 F.3d 925, 928 (5th Cir. 1997) (citing Anderson, 477 U.S. at 252); see also Brady v. Town of Colchester, 863 F.2d 205, 211 (2d Cir. 1988). Where the non-movant will bear the ultimate burden of proof on an issue at trial, the movant's burden under Rule 56 will be satisfied if the movant can point to an absence of evidence to support an essential element of the non-movant's claim. See, e.g., Brady, 863 F.2d at 210-11. Where a movant without the underlying burden offers evidence that the non-movant has failed to establish her claim, the burden shifts to the non-movant to offer "persuasive evidence that [her] claim is not 'implausible.'" Brady, 863 F.2d at 211 (citing Matsushita, 475 U.S. at 587).

V. DISCUSSION

A. Breach of Contract Claim (Count I)

Plaintiffs' first count seeks recovery against Clean Seas for breach of contract. Plaintiffs acknowledge that they are not parties to a contract with Clean Seas, either written or oral. (Pls.' Mem. in Opp'n to Mot. for Summ. J. 16.) Nonetheless, Plaintiffs argue they are third-party beneficiaries under the Distribution Agreement between Clean Seas and Dolphinite and, as such, that they have standing to sue Clean Seas for breach of the Distribution Agreement. (Pls.' Mem. in Opp'n to Mot. for Summ. J. 16; see also Def.'s 56.1 Ex. B.)

New York has adopted the reasoning and terminology of the Restatement (Second) of Contracts with regard to whether a third-party beneficiary has enforceable rights under the contract in question. See, e.g., Fourth Ocean Putnam Corp. v. Interstate Wrecking Co., 66 N.Y.2d 38, 44-45 (1985). Under New York law, intended third-party beneficiaries do have such rights, whereas incidental third-party beneficiaries do not. See, e.g., Fourth Ocean Putnam Corp., 66 N.Y.2d at 44-45. To qualify as an intended third-party beneficiary, inter alia, "recognition of the beneficiary's right to performance must be appropriate to effect the intention of the parties" to the contract. Fourth Ocean Putnam Corp., 66 N.Y.2d at 44 n.2 (citing Restatement (Second) of Contracts § 302 (1981)). Intention is determined by examining the contract itself as well as the "surrounding circumstances." Septembertide Publ'g, B.V. v. Stein & Day, Inc., 884 F.2d 675, 679 (2d Cir. 1989). At trial, parties claiming to be intended third-party beneficiaries bear the burden of establishing, inter alia, "that the contract was intended for [their] benefit and . . . that the benefit to [them] is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate [them] if the benefit is lost." Mendel v. Henry Phipps Plaza West, Inc., 6 N.Y.3d 783, 786 (2006) (quoting Burns Jackson Miller Summit & Spitzer v. Lindner, 59 N.Y.2d 314, 336 (1983)).

In this case, Plaintiffs provide no citations to admissible evidence to support their claim that they were intended third-party beneficiaries under the Distribution Agreement. Specifically, Plaintiffs cite no provisions of the Distribution Agreement itself and, furthermore, cite no admissible evidence relevant to the "surrounding circumstances." Septembertide Publ'g B.V., 884 F.2d at 679. Instead, Plaintiffs merely proffer the wholly conclusory statement that "Dolphinite intended the Plaintiffs to be beneficiaries of the Distribution Agreement between itself and Clean Seas." (Pls.' Mem. in Opp'n to Mot. for Summ. J. 16-17.) Clean Seas has noted the absence of evidence to support Plaintiffs' claimed status as intended third-party beneficiaries. (See Def.'s Mem. in Reply to Pls.' Mem. in Opp'n 3-4.) Because Plaintiffs would bear the burden of proof on this issue at trial, Clean Seas has thereby met its burden under Rule 56. See, e.g., Brady v. Town of Colchester, 863 F.2d 205, 210-11 (2d Cir. 1988). Plaintiffs' conclusory statement is not sufficient to defeat Clean Seas' properly supported motion for summary judgment. See, e.g., Gottlieb v. County of Orange, 84 F.3d 511, 518 (2d Cir. 1996).

Accordingly, Clean Seas' motion for summary judgment is GRANTED with regard to Count I (Breach of Contract).

B. Negligence and Strict Products Liability Claims (Counts II & IX)

Plaintiffs' second and ninth counts seek recovery against Clean Seas for negligence and strict products liability. Plaintiffs acknowledge that their claims against Clean Seas are for economic losses. (See Def.'s 56.1 ¶ 36; Pls.' Mem. in Opp'n to Mot. for Summ. J. 8.) Clean Seas argues that, as such, Plaintiffs' negligence and strict products liability causes of action are barred by New York's economic loss rule. (See Def.'s Mem. in Supp. of Mot. for Summ. J. 14-16.) Plaintiffs contend that New York's economic loss rule does not bar such tort claims where a manufacturer has expressly warranted the effective performance of its product to the plaintiffs in question. (Pls.' Mem. in Opp'n to Mot. for Summ. J. 7-8.)

The New York Court of Appeals first announced its economic loss rule in Schiavone Construction Co. v. Elgood Mayo Corp., 56 N.Y.2d 667 (1982), when it adopted the dissenting opinion of Justice Silverman from the case below. See Schiavone Constr. Co. v. Elgood Mayo Corp., 439 N.Y.S.2d 933, 937-41 (1st Dep't 1981) (Silverman, J., dissenting), rev'd, 56 N.Y.2d 667 (1982). Justice Silverman framed the issue before the Appellate Division as follows:

The issue is whether New York will permit a cause of action based on strict products liability as against a remote manufacturer who made no representations to plaintiffs, who has no privity of contract with plaintiffs, and where the only claim by plaintiffs is that the product failed to function properly, resulting in economic loss to plaintiffs. We must distinguish between two types of cases: (a) Where the product is unduly dangerous so that the defect causes physical damage . . . to either persons or property.

(b) Where the product, although not itself unduly dangerous, does not function properly, resulting in economic loss other than physical damage to persons or property (and where the product is not sold under the manufacturer's trade name or label, or under a warranty, by advertisements or otherwise, that may fairly be said to run from the manufacturer to the ultimate user or purchaser).

Schiavone, 439 N.Y.S.2d at 937 (Silverman, J., dissenting), rev'd, 56 N.Y.2d 667 (1982). Justice Silverman argued that a cause of action for strict products liability should lie in the former situation, (a), but not in the latter situation, (b):

[T]he economic ramifications of permitting a cause of action against the manufacturer in the latter situation [(b)] are so extensive and unforeseeable that it is better for the courts not to extend strict products liability to this area, leaving the owner of the product to its remedy based on its contract with the seller, and likewise leaving the seller to its remedies against the person from whom it bought the equipment . . . .

Schiavone, 439 N.Y.S.2d at 938 (Silverman, J., dissenting), rev'd, 56 N.Y.2d 667 (1982). Justice Silverman's original characterization of New York's economic loss rule, then, seemed to incorporate several caveats and restrictions. In essence, Plaintiffs and Clean Seas disagree regarding the impact of these apparent caveats and restrictions on this case. Neither party cites, however, what the Court regards as the controlling case on New York's economic loss rule.

In Bocre Leasing Corp. v. General Motors Corp. (Allison Gas Turbine Div.), 84 N.Y.2d 685 (1995), the New York Court of Appeals adopted the restrictive, bright-line version of the economic loss rule first announced by the United States Supreme Court in an admiralty case, East River Steamship Corp. v. Transamerica Delaval, Inc., 476 U.S. 858 (1986). In light of Bocre, Plaintiffs' reliance on the apparent caveats and restrictions in Justice Silverman's original characterization of New York's economic loss rule is misplaced. Moreover, a careful reading of Bocre suggests that the Court of Appeals would not permit an exception to the economic loss rule in the case at bar.*fn3 As wholesale distributors of marine products (Def.'s 56.1 ¶ 6), Plaintiffs were commercial purchasers of the Product, and Bocre makes clear that commercial purchasers should not expect to recover purely economic losses against a remote manufacturer under strict products liability or negligence theories, see Bocre, 84 N.Y.2d at 694. Where, as here, the dispute is "essentially [a] contractual, product-failure controvers[y]," Bocre, 84 N.Y.2d at 694, the Court of Appeals has explained that "cogent policy considerations militate against allowing tort recovery for . . . economic losses," Bocre, 84 N.Y.2d at 688 (citing East River, 476 U.S. at 870-75).

Accordingly, Clean Seas' motion for summary judgment is GRANTED with regard to Count II (Negligence) and Count IX (Defective Product-Strict Products Liability).

C. Breach of Express Warranty, Common Law Fraud, Negligent Misrepresentation, and Intentional Misrepresentation Claims (Counts III, VI, VII & VIII)

Plaintiffs' third, sixth, seventh, and eighth counts seek recovery against Clean Seas for breach of express warranty, common law fraud, negligent misrepresentation, and intentional misrepresentation. Clean Seas contends that it made no representations to Plaintiffs regarding the performance of the Product. (See Def.'s Mem. in Supp. of Mot. for Summ. J. 18-19.) Moreover, Clean Seas argues, even assuming arguendo Clean Seas made representations to Plaintiffs, that Plaintiffs nonetheless did not rely on any such representations in deciding to purchase the Product. (See Def.'s Mem. in Reply to Pls.' Mem. in Opp'n 5-9.) Plaintiffs claim that (1) "all representations made in any sort of marketing or advertising at trade shows, in catalogs, or otherwise, were made [by Boulay] at the direction of Martin Polsenksi, as officer and part owner of Clean Seas," and that (2) "Clean Seas visa vie [sic] the 'MET' notation and the Clean Seas logo [contained on the Product's label] represented and warranted that the paint product protected vessel hulls from marine growth, enhanced fuel efficiency, and increased vessel speed." (Pls.' Mem. in Opp'n to Mot. for Summ. J. 9.) Furthermore, Plaintiffs insist that they relied on representations Clean Seas made in labeling and marketing the Product. (Pls.' Mem. in Opp'n to Mot. for Summ. J. 8.)

1. Clean Seas Is Not Bound by Any Oral Representations Made to Plaintiffs by Boulay

Plaintiffs had no direct contact with Clean Seas representatives prior to receiving complaints about the effectiveness of the Product. (Def.'s 56.1 ¶¶ 13, 15, 20, 21, 22 & 27.)*fn4

However, Plaintiffs allege-without citation to the record-that "all representations made in any sort of marketing or advertising at trade shows, in catalogs, or otherwise, were made [by Boulay] at the direction of Martin Polsenksi, as officer and part owner of Clean Seas," seemingly suggesting that Boulay was Clean Seas' agent and that, as such, Clean Seas is bound by any representations made orally to Plaintiffs by Boulay. (See Pls.' Mem. in Opp'n to Mot. for Summ. J. 9.)

Under New York law, "[a]gency is the relationship that results from the manifestation of consent by one person [the principal] to another [the agent] that the other shall act on his behalf and subject to his control, and consent by the other so to act." G.D. Searle & Co. v. Medicore Commc'ns, Inc., 843 F. Supp. 895, 904 (S.D.N.Y. 1994) (citing Kyung Sup Ahn v. Rooney, Pace Inc., 624 F. Supp. 368, 370 (S.D.N.Y. 1985)); see also N.Y. Marine & Gen. Ins. Co. v. Tradeline (L.L.C.), 266 F.3d 112, 122 (2d Cir. 2001) (quoting Meese v. Miller, 436 N.Y.S.2d 496, 499 (4th Dep't 1981)). "One of the primary characteristics of agency is that the agent is placed in a position whereby he may affect or alter the legal relations between the principal and third persons." G.D. Searle & Co., 843 F. Supp. at 904 (citing 2 N.Y. Jur. 2d, Agency and Independent Contractors § 2 (1979)); see also 15 Causes of Action 723, Cause of Action for Economic Loss Resulting from Breach of Express Warranty Under UCC § 2-313 § 7 (2009) (indicating that "to establish that the defendant made representations relating to the goods purchased by the plaintiff, it will be necessary for the plaintiff to show either that the defendant made such representations directly or that such representations were attributable to the defendant[;] [t]hus, where the representations in question were not made directly by the defendant, it will be necessary for the plaintiff to show that the person or party making them was acting as an agent of the defendant in so doing").

Although Plaintiffs presumably rely on an agency theory, Plaintiffs never explicitly argue in their motion papers that Boulay was Clean Seas' agent and thus, not surprisingly, fail to provide any citations to admissible evidence in explicit support of the view that Boulay was Clean Seas' agent. However, Plaintiffs do provide one citation to admissible evidence that might conceivably support an agency argument. (See Pls.' Revised Decl. of Deps. Ex. A, Vol. 2, 65.) Still, that single citation concerns only Clean Seas' undisputed control over the written application and storage instructions on the Product's labels (see Def.'s Resp. to Pls.' 56.1 ¶¶ 60 & 61) and amounts, at best, to a mere "scintilla of evidence" on the issue of agency, at least insofar as it relates to any oral representations made to Plaintiffs by Boulay, Del. & Hudson Ry. Co. v. Cons. Rail Corp., 902 F.2d 174, 178 (2d Cir. 1990) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986)). It is difficult for the Court to discern how a rational juror could conclude, based only on Clean Seas' acknowledged control over the written application and storage instructions on the Product's labels, that Boulay was acting as Clean Seas' agent in making oral representations to Plaintiffs. Indeed, Plaintiffs proffer no citations to admissible evidence to support the view that Clean Seas exercised any control over oral representations made to Plaintiffs by Boulay.

At trial, the party claiming to have dealt with an agent has the burden of proving the agency. See, e.g., Oldman-Magee Boiler Works, Inc. v. Ocean & Inland Transp. Co., 205 N.Y.S. 550, 551 (4th Dep't 1924); Nomura Sec. Int'l, Inc. v. E*Trade Sec., Inc., 280 F. Supp. 2d 184, 196 (S.D.N.Y. 2003) (quoting La Societe Nationale Pour La Recherche v. Shaheen Natural Res. Co., 585 F. Supp. 57, 62 (S.D.N.Y.1983)). Clean Seas has noted the absence of evidence to support Plaintiffs' apparent position on the issue of agency.*fn5 (See Def.'s Mem. in Reply to Pls.' Mem. in Opp'n 6; Def.'s Mem. in Supp. of Mot. for Summ. J. 16-17.) Because Plaintiffs would bear the burden of proof on this issue at trial, Clean Seas has thereby met its burden under Rule 56. See, e.g., Brady v. Town of Colchester, 863 F.2d 205, 210-11 (2d Cir. 1988). Plaintiffs have proffered, at best, a "scintilla of evidence" on the issue of agency, at least as it relates to any oral representations made to Plaintiffs by Boulay. Del. & Hudson Ry. Co., 902 F.2d at 178 (quoting Anderson, 477 U.S. at 252). As such, the Court concludes that there are no genuine issues of material fact regarding whether Clean Seas is bound by any representations made orally to Plaintiffs by Boulay and, insofar as any such oral representations are concerned, that Clean Seas is entitled to judgment as a matter of law.

2. Plaintiffs Did Not Rely on Any Written Representations Made Via the Product's Labels or Via Any Marketing Literature Distributed to Plaintiffs by Boulay

Clean Seas contends, even assuming arguendo Clean Seas made representations to Plaintiffs via the Product's labels and via any marketing literature distributed to Plaintiffs by Boulay, that Plaintiffs nonetheless did not rely on any such representations in making their purchasing decisions. (See Def.'s Mem. in Reply to Pls.' Mem. in Opp'n 5-9.) In essence, Clean Seas argues that even if there are genuine issues of material fact regarding whether Clean Seas made representations to Plaintiffs via the Product's labels or via any marketing literature provided by Boulay, such issues are ultimately irrelevant here since reliance is an essential element of Plaintiffs' express warranty,*fn6 common law fraud, negligent misrepresentation, and intentional misrepresentation claims, and since "[i]f the undisputed facts reveal that there is an absence of sufficient proof as to one essential element of [a] claim, any factual disputes with respect to other elements of the claim become immaterial and cannot defeat a motion for summary judgment." Burke v. Jacoby, 981 F.2d 1372, 1379 (2d Cir. 1992) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)).

Plaintiffs proffer a single citation to admissible evidence in support of their claim that they relied on any representations made by Clean Seas either via the Product's labels or via any marketing literature provided to Plaintiffs by Boulay. (See Pls.' Revised Decl. of Deps. Ex. L 26:16-29:19.) However, the proffered testimony concerns only one Plaintiff-namely, Kellogg Marine, Inc. ("Kellogg")-and nowhere indicates that even Kellogg itself (let alone the other three Plaintiffs) ever read or even saw (let alone relied upon) either the Product's labels or any marketing literature provided by Boulay prior to making their purchasing decision. In fact, when asked directly about marketing literature, Kenneth Ferleger, sales manager for Kellogg, testified that he did not remember seeing any "promotional material" from Dolphinite.*fn7 (Pls.' Revised Decl. of Deps. Ex. L 22:13-25.)

Clean Seas has noted the absence of evidence to support Plaintiffs' position on the issue of reliance. (See Def.'s Mem. in Reply to Pls.' Mem. in Opp'n 5-9.) Plaintiffs would bear the burden of proof on this issue at trial. See, e.g., King v. Crossland Sav. Bank, 111 F.3d 251, 258 (2d Cir. 1997) (citing Harsco Corp. v. Segui, 91 F.3d 337, 342 (2d Cir.1996)) (indicating that "a plaintiff must prove reasonable reliance 'under New York law to recover for . . . negligent misrepresentation"); Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d 13, 19 (2d Cir. 1996) (quoting Banque Arabe et Internationale D'Investissement v. Md. Nat'l Bank, 57 F.3d 146, 153 (2d Cir. 1995)) (indicating that "[t]o prove fraud under New York law, 'a plaintiff must show that . . . plaintiff reasonably relied upon the representation'"); Arnold v. Krause, Inc., 232 F.R.D. 58, 74 (W.D.N.Y. 2004) (citing Schimmenti v. Ply Gem Indus., Inc., 549 N.Y.S.2d 152 (2d Dep't 1989)) (indicating that "[t]o establish a prima facie case for breach of express warranty, [p]laintiffs were required to present some evidence that . . . [p]laintiffs relied upon . . . [defendant's] affirmation of fact or promise"). Clean Seas has thereby met its burden under Rule 56. See, e.g., Brady v. Town of Colchester, 863 F.2d 205, 210-11 (2d Cir. 1988). Plaintiffs' single citation to admissible evidence-which concerns only one Plaintiff and nowhere suggests even that one Plaintiff ever read or even saw (let alone relied upon) either the Product's labels or any marketing literature provided by Boulay prior to making their purchasing decision-is not sufficient to defeat Clean Seas' properly supported motion for summary judgment.

Accordingly, Clean Seas' motion for summary judgment is GRANTED with regard to Count III (Breach of Express Warranty), Count VI (Common Law Fraud), Count VII (Negligent Misrepresentation), and Count VIII (Intentional Misrepresentation).*fn8

D. Breach of Implied Warranty Claims (Counts IV & V)

Plaintiffs' fourth and fifth counts seek recovery against Clean Seas for breach of implied warranties of merchantability and fitness for a particular purpose. Clean Seas argues that because Plaintiffs were not in privity of contract with Clean Seas, Plaintiffs cannot maintain causes of action for breach of implied warranties against Clean Seas. (Def.'s Mem. in Supp. of Mot. for Summ. J. 16-17.) Plaintiffs contend that under New York law privity is not required where a remote purchaser and an immediate purchaser, who is in privity of contract with the manufacturer, have identical interests in remedying the manufacturer's defective product. (Pls.' Mem. in Opp'n to Mot. for Summ. J. 12-13.)

Under New York law, privity is generally required to recover economic losses pursuant to a cause of action for breach of implied warranty. See, e.g., Adirondack Combustion Techs., Inc. v. Unicontrol, Inc., 793 N.Y.S.2d 576, 579 (3d Dep't 2005) (citing Arthur Jaffee Assocs. v. Bilsco Auto Serv., Inc., 58 N.Y.2d 993, 995 (1983)). In support of their claim that an exception to this general privity requirement is applicable here, Plaintiffs cite a single case from the Supreme Court for New York County, Stuart Becker & Co. v. Steven Kessler Motor Cars, Inc., 517 N.Y.S.2d 692 (Sup. Ct. New York County 1987).

Plaintiffs' reliance on Stuart Becker is misplaced. Stuart Becker allowed an exception to the general privity requirement "[u]nder the distinguishable facts of th[at] case." Stuart Becker, 517 N.Y.S.2d at 695. The distinguishable facts of that case involved an automobile lessor which had explicitly assigned all of its warranty rights against the manufacturer to a remote lessee for the duration of the lease agreement between the lessor and lessee. See Stuart Becker, 517 N.Y.S.2d at 693. As explained in Stuart Becker:

As distinct from a remote purchaser further along the distributive chain, when a lessee, such as Becker, leases an automobile from an automobile leasing enterprise well known to the automobile dealer, the Lessor and Lessee, since both have identical interests when not acting together to remedy the automobile's defect, should be viewed as a single unit to avoid the application of the doctrine of privity, and the absence of a direct contractual relationship between Becker, the manufacturer and seller of the car should not bar recovery by Becker.

Stuart Becker, 517 N.Y.S.2d at 695 (emphasis added). The present case does not involve a lease agreement; rather, it involves a "remote purchaser further along the distributive chain." Stuart Becker, 517 N.Y.S.2d at 695. As such, by its own terms, Stuart Becker fails to support Plaintiffs' position. In further contradistinction to Stuart Becker, in this case there is no allegation that Dolphinite assigned all of its warranty rights against Clean Seas to Plaintiffs. Cf. Stuart Becker, 517 N.Y.S.2d at 693.

Accordingly, Clean Seas' motion for summary judgment is GRANTED with regard to Count IV (Breach of Implied Warranty of Merchantability) and Count V (Breach of Implied Warranty of Fitness for a Particular Purpose).

E. Contribution Claim (Count XI)

Plaintiffs' eleventh count seeks recovery against Clean Seas for contribution.*fn9 Clean Seas argues that it must be liable to Plaintiffs in tort before Plaintiffs can maintain a claim against it for contribution and that, because Clean Seas is entitled to summary judgment on all counts sounding in tort, Plaintiffs' cause of action for contribution necessarily fails. (Def.'s Mem. in Supp. of Mot. for Summ. J. 20.) Clean Seas is mistaken.

A claim for contribution is brought by one tortfeasor who has been compelled to pay more than its equitable share of a common burden against another tortfeasor so as to force that other tortfeasor to pay its equitable share of the common burden. See, e.g., Board of Education v. Sargent, Webster, Crenshaw & Folley, 71 N.Y.2d 21 (1987) (describing historical development of contribution claims under New York law). Under New York law, claims for contribution may be asserted between "two or more persons who are subject to liability for damages for the same personal injury, injury to property or wrongful death." N.Y. C.P.L.R. § 1401. "A tortfeasor's liability for contribution may flow from either of two sources: breach of a duty to the plaintiff [the injured party] or to the party seeking contribution." Id. Practice Commentaries C1401:3 (McKinney 1997) (emphasis added). Thus, even if Clean Seas breached no duty to Plaintiffs, it may still be liable to Plaintiffs for contribution based upon its breach of duty to the injured party, viz. end-user customers who painted their boats with the Product. See id. ("In most cases, the tortfeasor against whom a contribution claim is asserted will have breached a duty to the [injured party]"). As such, the Court is unpersuaded, at least as the argument is framed by Clean Seas, that Plaintiffs' cause of action for contribution fails as a matter of law.*fn10

Accordingly, Clean Seas' motion for summary judgment is DENIED with regard to Count XI (Contribution).

F. Indemnity Claim (Count X)

Plaintiffs' tenth count seeks recovery against Clean Seas for indemnification. As opposed to contribution, where the loss is distributed among joint tort-feasors who are each required to pay a proportionate share of the loss, "in indemnity the party held legally liable shifts the entire loss to another." Rosado v. Proctor & Schwartz, Inc., 66 N.Y.2d 21, 24 (1985). The right to indemnification arises out of a contract, but the contract is often one implied by law to prevent an unjust enrichment or an unfair result. Rosado, 66 N.Y.2d at 24. Such implied indemnification "finds its roots in the principles of equity." McDermott v. City of New York, 50 N.Y.2d 211, 216-17 (1980). "Implied indemnification claims . . . may rest on various independent grounds-for example, indemnity may be appropriate because of a separate duty owed the indemnitee by the indemnitor, or because one of two parties is considered actively negligent or the primary or principal wrongdoer." Bellevue South Associates v. HRH Constr. Corp., 78 N.Y.2d 282, 296 (1991). Defendant contends that neither type of indemnification claim is available to Plaintiffs in this action. The Court will discuss each type of indemnification claim separately below.

1. Implied Warranty Indemnity Based Upon

Separate Duty Owed the Indemnitee by the Indemnitor The New York Court of Appeals has recognized that a party may assert a claim for implied indemnity against the manufacturer of an allegedly defective product even where no such cause of action may be directly maintained by the injured plaintiff. See id. at 297 (finding that "[t]he warranty claim formed an independent basis for liability, available to the indemnitee against the indemnitor regardless of the ability of the plaintiff to assert a similar claim"). Here, the Court has already found that Plaintiffs do not have a meritorious implied warranty claim against Clean Seas. (See supra Part V.D. (granting Clean Seas' motion for summary judgment with regard to Count IV and Count V.) Accordingly, Plaintiffs may not maintain an implied warranty indemnification claim against Clean Seas.

2. Implied Indemnity Claim Against Principal Wrongdoer

Where one party is held liable solely on account of the negligence of another, indemnification applies to shift the entire liability to the one who was negligent. See Bellevue, 78 N.Y.2d at 297-98; D'Ambrosio v. City of N.Y., 55 N.Y.2d 454, 462 (1982). This type of indemnity is not available, however, where the party seeking indemnification was itself at fault. See Bellevue, 78 N.Y.2d at 297-98 (stating that "innocent party" may shift liability); Rosado, 66 N.Y.2d at 24-25 ("A party who has settled and seeks what it characterizes as indemnification thus must show that it may not be held responsible in any degree."); Trs. of Columbia Univ. v. Mitchell/Giurgola Assocs., 492 N.Y.S.2d 371, 375 (1st Dep't 1985) ("Since the predicate of common law indemnity is vicarious liability without actual fault on the part of the proposed indemnitee, it follows that a party who has itself actually participated to some degree in the wrongdoing cannot receive the benefit of the doctrine.").

Plaintiffs argue that because they "have had to defend lawsuits by customers related to the sale of defective paint products that Clean Seas manufactured and expressly warranted[,] Plaintiffs are entitled to indemnification because they have been compelled to pay for the wrong of another." (Pls.' Mem. in Opp'n to Mot. for Summ. J. 17.) Plaintiffs further contend that "[a]s a passive party in the supply chain, Plaintiffs in no way contributed any degree of wrongdoing, and therefore, ought to receive the benefit of indemnity." (Id. at 17-18.) Clean Seas maintains that even assuming arguendo the Product was defective, Plaintiffs, as distributors of the defective Product, were not innocent parties. (Def.'s Mem. in Supp. of Mot. for Summ. J. 21.)

In support of its argument, Clean Seas relies on Durabla Manufacturing Co. v. Goodyear Tire & Rubber Co., 992 F. Supp. 657 (S.D.N.Y. 1998), where the court found that "there is nothing passive about the role of a distributor of a defective or hazardous product." Id. at 660. In Durabla, a distributor of a defective product settled claims brought against it by injured end-users and then sued the manufacturers of the product for indemnity. The distributor "maintain[ed] that the only exposure that led to its settlement of the underlying claims was strict liability . . .[and] that this 'passive' liability [wa]s akin to vicarious liability and therefore permit[ted] a claim for common law indemnification." Id. The court rejected this argument, finding that the distributor's role was not passive and that " 'any analogy' between strict liability and 'instances in which liability is fixed on another without regard to any volitional act . . . is clearly flawed.'" Id. (quoting Rosado, 66 N.Y.2d at 26). The court distinguished between a distributor's liability based upon strict liability, which is not vicarious, and a distributor's liability based upon warranties of suitability and merchantability, where "the liability is truly vicarious, i.e. implied by operation of law, and therefore a claim for indemnification can properly be pled." Id.

Relying on Durabla, Clean Seas argues that Plaintiffs cannot maintain an indemnity claim "with respect to strict liability or negligence claims" (Def.'s Mem. in Supp. of Mot. for Summ. J. 21), i.e., claims where Plaintiffs' liability to end-users was premised upon negligence or strict liability, because under those circumstances, Plaintiffs' liability would not be passive. The problem with that analysis, however, is that there is no information in the record as to the basis of Plaintiffs' liability to end-users. Although Plaintiffs state generally that they have had to "defend lawsuits by customers" and "they have been compelled to pay for the wrong of another," (Pls.' Mem. in Opp'n to Mot. for Summ. J. 17), they have provided the Court with no details as to the bases of these alleged lawsuits. Thus, based upon the present record, the Court is unable to determine whether Plaintiffs are barred as a matter of law from maintaining a cause of action for implied indemnification against Clean Seas.*fn11

Accordingly, Clean Seas' motion for summary judgment is DENIED with regard to Count X (Indemnity).

G. Claim for Attorneys' Fees and Costs (Count XII)

Plaintiffs' twelfth count seeks recovery against Clean Seas for attorneys' fees and costs. Cleans Seas argues that, under New York law, a claim for attorneys' fees and costs cannot be asserted as an independent cause of action; rather, Clean Seas contends that attorneys' fees and costs can only be demanded as an item of damages pursuant to some other cause of action. (Def.'s Mem. in Supp. of Mot. for Summ. J. 22-23.)

Under New York law, there appears to be some authority to support the view that a claim for attorneys' fees and costs may be asserted as a cause of action. See Fugazy Travel Bureau, Inc. v. Ernst & Ernst, 298 N.Y.S.2d 519, 520 (1st Dep't 1969) (citing Shindler v. Lamb, 211 N.Y.S.2d 762 (Sup. Ct. New York County 1959)) (indicating that "[i]f the alleged wrongful act of the defendant was the occasion of these [attorney's] fees, and if they are reasonable, a cause of action [for attorney's fees] does lie, as a well recognized exception to the rule that, in the absence of any contractual or statutory liability, attorney's fees and expenses incurred in litigating a claim, aside from the usual court costs, are not recoverable as an item of damages, either in that suit or in a suit subsequently brought"); see also 4 N.Y. Practice, Commercial Litig. in N.Y. State Cts. § 50:66 (2d ed. 2009) (indicating that "[t]here appears to be no required manner in New York State courts for pleading a claim for the recovery of legal fees[;] [i]n many cases, the party advancing the claim will plead it as a separate cause of action in the complaint or counterclaims"). Moreover, because the Court denies Clean Seas' motion for summary judgment with regard to Count X, Indemnity (see supra Part V.E.), and Count XI, Contribution (see supra Part V.F.), Clean Seas' argument that a cause of action for attorneys' fees and costs cannot be maintained independently of another cause of action is moot.

Accordingly, Clean Seas' motion for summary judgment is DENIED with regard to Count XII (Request for Attorneys' Fees and Costs).

VI. CONCLUSION

For all the foregoing reasons, Clean Seas' motion for summary judgment is GRANTED with regard to Count I (Breach of Contract), Count II (Negligence), Count III (Breach of Express Warranty), Count IV (Breach of Implied Warranty of Merchantability), Count V (Breach of Implied Warranty of Fitness for a Particular Purpose), Count VI (Common Law Fraud), Count VII (Negligent Misrepresentation), Count VIII (Intentional Misrepresentation), and Count IX (Defective Product-Strict Products Liability). Clean Seas' motion for summary judgment is DENIED with regard to Count X (Indemnity), Count XI (Contribution), and Count XII (Request for Attorneys' Fees and Costs). Given the absence of information in the record on Plaintiffs' claims for contribution and indemnity, most notably, whether any judgments have been rendered against Plaintiffs, whether Plaintiffs entered into any settlements with end-users, and the basis for any such liability, the Court grants Clean Seas leave to file another motion for summary judgment on these claims. Defendants shall serve its motion on or before April 21, 2010; Plaintiffs shall serve opposition papers on or before May 19, 2010; and Defendants shall serve reply papers, if any, and file all papers with the Court, on or before June 2, 2010.

SO ORDERED.

Dated: March 24, 2010 Central Islip, New York

Denis R. Hurley Senior District Judge


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