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