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Franklin Capital Holdings LLC v. NY Accessory Group, LLC

United States District Court, S.D. New York

May 21, 2014

FRANKLIN CAPITAL HOLDINGS LLC, Plaintiff/Counter-Defendant,
v.
NY ACCESSORY GROUP, LLC, Defendant/Counter-Claimant.

OPINION & ORDER

HAROLD BAER, Jr., District Judge.

Plaintiff Franklin Capital Holdings LLC ("Plaintiff") brings this action for breach of contract against Defendant NY Accessory Group ("Defendant"), and moves for summary judgment on Plaintiff's breach of contract claim and Defendant's counterclaims for breach of warranty against Plaintiff and Fairdeal Apparel, LLC ("Fairdeal") and for indemnification only against Fairdeal.[1] Plaintiff also moves to strike portions of the affidavit of Mark Seruya and Defendant's Responsive Rule 56.1 Statement. For the reasons set forth below, Plaintiff's motions are GRANTED, and as a consequence I need not reach Defendant's indemnification counterclaim. Parenthetically, the Court notes that the motion must be denied as well, due to the Defendant having failed to effect timely service on Fairdeal.

BACKGROUND[2]

On April 12, 2012, Plaintiff entered into an Accounts Receivable Purchase Agreement ("Purchase Agreement") with Fairdeal through which Plaintiff purchased Fairdeal's right to certain accounts, including future accounts. (Pl.'s 56.1 ¶ 20; Edidin Decl. ¶ 4.) On June 13, 2012, Defendant issued three purchase orders, totaling $134, 400 (collectively, "Purchase Orders") to Fairdeal, which were included in Fairdeal's Purchase Agreement with Plaintiff. (Pl.'s 56.1 ¶ ¶ 4, 5; Def.'s Opp. Mem. Ex. B.)[3] The Purchase Orders were for 19, 200 shirts and ties packed in clear gift boxes (collectively, "goods"). (Pl.'s 56.1 ¶ 8; Seruya Dep. 15:19-23; Def.'s Opp. Mem. Ex. A.) The Purchase Orders included fifteen instructions about the quality and presentation of the goods, including a note in bold stating "Instructions to Follow for Master PO, " and listed a "Start Ship" date of July 20, 2012 and a "Completion Date" of August 5, 2012. (Def.'s Opp. Mem. Ex. B.) Fairdeal complied with all instructions listed on the Purchase Orders except the ship date. (Seruya Dep. 17:12-19; 18:5-20; 18:21-19:10.) According to Mark Seruya ("Seruya"), the sole owner of Defendant company, the goods arrived "sometime in September." (Seruya Dep. 7:24-8:6; 31:20-32:4.) Plaintiff does not dispute that the goods were delivered late. (Pl. Mem. at 5.) Notwithstanding their late delivery, Defendant accepted delivery of the goods and inspected them. (Pl.'s 56.1 ¶ 10; Pl.'s Mem. Ex. D, Pl.'s Requests to Admit ¶ 2; Seruya Dep. 16:11-14; 18:2-4;19:1-3.) At some point thereafter, Defendant noticed a "problem... within the gift box, the tape used to seal the gift box was not adhering." (Seruya Dep. 33: 17-19.) Defendant claims that its customers complained about this and returned goods to Defendant as a result. ( See Def. Opp. Mem., Exs. C and D, Forms reflecting Returns to Defendant.) After this issue arose, Defendant attempted to sell and successfully sold some of the goods. (Seruya Dep. 40:20-41:8.) None of the goods have been returned to Fairdeal, nor have Fairdeal or Plaintiff been paid for these goods. ( Id. at 57:13-16; 74:22-75:5.)

DISCUSSION

"Summary judgment is appropriate only if there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'" Kuebel v. Black & Decker Inc., 643 F.3d 352, 358 (2d Cir. 2011) (quoting Fed.R.Civ.P. 56(a)). The Court must "constru[e] the evidence in the light most favorable to the nonmoving party and draw[] all reasonable inferences in that party's favor." Id. "In opposing the motion for summary judgment, the non-moving party may not rely on conclusory allegations or unsubstantiated speculation, ' or on mere denials or unsupported alternative explanations of its conduct." Abbey v. 3F Therapeutics, Inc., 06 CV 409 KMW, 2011 WL 651416, *6 (S.D.N.Y. Feb. 22, 2011) aff'd sub nom. Abbey v. Skokos, 509 F.Appx. 92 (2d Cir. 2013) (quoting Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir.1998), and citing S.E.C. v. Grotto, No. 05-5880, 2006 WL 3025878, at *7 (S.D.N.Y. Oct.24, 2006). "Rather, the non-moving party must set forth significant, probative evidence on which a reasonable fact-finder could decide in its favor." Id. (citing Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986)).

A. Defendant's Acceptance of Goods

It is undisputed that Defendant accepted delivery of the goods at issue here. Defendant's ability to revoke acceptance is governed by N.Y. U.C.C. Law §§ 2-607 and 2-608. In relevant part, § 2-607 provides:

(2) Acceptance of goods by the buyer precludes rejection of the goods accepted and if made with knowledge of a non-conformity cannot be revoked because of it unless the acceptance was on the reasonable assumption that the non-conformity would be seasonably cured but acceptance does not of itself impair any other remedy provided by this Article for non-conformity.

N.Y. U.C.C. Law § 2-607. There are two alleged non-conformities at issue here: the late delivery date and the non-adhering tape. However, because Defendant was aware of the late delivery date at the time of delivery and accepted the goods, tardiness of delivery may not be a basis for revocation.

Defendant claims that it did not know about the non-adhering tape at the time of delivery, while Plaintiff opines that the Purchase Orders did not require that a certain type of tape be used, and argues that a failure to use any specific tape where none is prescribed cannot constitute a non-conformity. Each Purchase Order provides the requirements listed below and as is plain to see there is no specific tape required:

INSTRUCTIONS TO FOLLOW FOR MASTER PO#
1) Size scale enclosed to be used
2) Shirts must be packed in 12 ...

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