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Upstate Shredding, LLC v. Northeastern Ferrous, Inc.

United States District Court, N.D. New York

September 30, 2014



LAWRENCE E. KAHN, District Judge.


This matter comes before the Court on Defendants Northeastern Ferrous, Inc. ("Northeastern") and Jay Goldblatt's ("Goldblatt") (together, "Defendants") Motion for summary judgment on Plaintiffs Upstate Shredding, LLC ("Upstate") and Weitsman Shredding, LLC's ("Weitsman Shredding") (together, "Plaintiffs") original claims and Northeastern's counterclaims. Dkt. Nos. 25 ("Motion"); 25-10 ("Memorandum"). Plaintiffs filed a Response and cross-moved for judgment on the pleadings or summary judgment on behalf of Third Party Defendant Adam Weitsman ("Weitsman").[1] Dkt. No. 31-16 ("Response"). Defendants replied, and Plaintiffs filed an Sur-Reply to Defendants' Reply on the issue of their cross-motion. Dkt. Nos. 36 ("Reply"); 38. For the following reasons, Defendants' Motion is granted in part and denied in part, and Plaintiff's cross-motion is granted.


In or around September 2010, Plaintiffs, which are New York corporations engaging in the purchase and processing of scrap metals, began a course of dealing with Northeastern, a Canadian corporation, to acquire scrap metal. Dkt. No. 31-15 ("Plaintiffs' Response SMF") ¶¶ 1-2. Plaintiffs and Northeastern did not communicate directly; rather, all interactions occurred through a broker, John Finn ("Finn"). Id . ¶¶ 4-5. Specifically, Plaintiffs would quote a price per ton of scrap and send that quoted price to Finn. Id . ¶ 4. Finn would relay the quoted price to Northeastern, who would then arrange for a shipping company to haul materials to Plaintiffs' New York facility if the quoted price was agreeable. Id.

When shipments arrive at Plaintiffs' facility, Plaintiffs' employees in the scrap yard weigh the incoming shipment and determine the amount of dirt, debris, and other non-processable materials present. Id . ¶¶ 18-21. Plaintiffs' employees would often push apart the heap of scrap with a front-end loader to get a better view and make a more accurate determination as to dirt. Id . ¶ 25. After making that determination, Plaintiffs would radio their estimate to another Upstate employee, who would make a note on the scale ticket for each truck. Id . ¶ 24. The amount of debris would then be deducted from the total weight of the scrap shipment in order to derive the price owed to Northeastern. Id . ¶ 26. Although there is no industry standard regarding the amount of dirt to be expected or acceptable in a given shipment, Plaintiffs assert that a typical shipment would contain between one and a half and two percent dirt. Id . ¶ 27.

Between September 2010 and June 2011, Plaintiffs would regularly relay quoted prices to Finn; Northeastern would arrange shipment of materials to Plaintiffs; and Plaintiffs would calculate the weight of usable scrap and make payment to Northeastern. Id . ¶¶ 6-7. Starting in June or July of 2011, however, Plaintiffs began to withhold payment for received shipments. Id . ¶ 10. Northeastern halted new shipments of scrap to Plaintiffs; at this time, Weitsman contacted Northeastern, asked why shipments had stopped, and scheduled a meeting with Goldblatt, an owner of Northeastern, to discuss future transactions. Id . ¶¶ 11-12. After two meetings between Weitsman and Goldblatt at which Weitsman assured Goldblatt that payments would resume if Goldblatt resumed shipments, id. ¶¶ 13-14, Northeastern resumed shipments, and Plaintiffs did not pay for any of them. Id . ¶¶ 15-17.

Plaintiffs allege that Weitsman received a voice message from a shipping company driver who claimed to be hauling Northeastern scrap to Plaintiffs. Dkt. No. 31-2 ("Weitsman Affidavit") ¶ 17. In this voicemail, they claim, the driver alleged that other drivers had orders from Northeastern to pay Plaintiffs' employees to deduct only usual amounts of dirt weight even though the shipments contained significantly more dirt than was customary. Id . As a result, Plaintiffs allege, they stopped making payments to Northeastern. Id . ¶ 25.

Plaintiffs further allege that they contacted the Federal Bureau of Investigation ("FBI"), who began an investigation into the matter. Id . ¶ 19. In an attempt to gather evidence, the FBI directed Weitsman to set up a meeting with a representative from Northeastern at which Weitsman would wear a wire. Id . ¶¶ 30-31. At that meeting, Weitsman alleges, the FBI suggested that Weitsman should do his best to get Northeastern to resume shipments, and to admit any occurrence of wrongdoing. Id . However, Plaintiffs make no allegations as to the results of the FBI investigation, or any consequences arising from that investigation. See generally id.; Pls.' Resp. SMF.

Plaintiffs then filed this action alleging breach of contract, common law fraud, conversion, and unjust enrichment claims against Defendants. Dkt. No. 1 ("Complaint"). In their Answer, Defendants counterclaimed against Plaintiffs, and additionally sued Weitsman individually, under the same causes of action advanced by Plaintiffs. Dkt. No. 9 ("Answer"). Following discovery, Defendants filed their Motion, which the Court now decides.


Summary judgment is proper where "there is no genuine issue as to any material fact, " and thus "the movant is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). "An issue of fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Niagara Mohawk Power Corp. v. Hudson River-Black River Regulating Dist., 673 F.3d 84, 94 (2d Cir. 2012). The moving party must first meet a burden of production, which differs depending on whether the moving party will have the burden of proving the claim or element at trial. Celotex, 477 U.S. at 330-32 (Brennan, J., dissenting). If a moving party has carried its burden, the nonmoving party must raise some genuine issue of material fact; "metaphysical doubt as to material facts" is not enough. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). That said, the court's duty is "carefully limited" to finding genuine disputes of material fact, "not to deciding them, " Gallo v. Prudential Residential Servs., 22 F.3d 1219, 1224 (2d Cir. 1994), because the Court is required to resolve all ambiguities in favor of the nonmoving party, Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000). The burden of persuasion remains at all times with the moving party, who must affirmatively demonstrate entitlement to judgment as a matter of law. Celotex, 477 U.S. at 332.


A. Breach of ...

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