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Eldesouky v. Aziz

United States District Court, S.D. New York

April 8, 2015

HESHAM ZAGHLOUL ELDESOUKY, et al., Plaintiffs,
v.
HATEM ABDEL AZIZ, et al., Defendants.

OPINION AND ORDER

JAMES L. COTT, Magistrate Judge.

By Opinion and Order dated December 19, 2014, the Court granted summary judgment against Hatem Abdel Aziz on Plaintiffs' breach of contract claim. The Court now considers the damages to which Plaintiffs are entitled by virtue of obtaining summary judgment against Aziz. For the reasons that follow, the Court directs that judgment be entered against Aziz in the amount of $1, 237, 301.36, plus prejudgment interest, as well as $8, 310.13 in attorneys' fees.

I. BACKGROUND

Familiarity with the Court's December 19, 2014 Opinion and Order ("Opinion and Order") related to Plaintiffs' motion for summary judgment and default judgment is presumed. See Eldesouky v. Aziz, No. 11-CV-6986 (JLC), 2014 WL 7271219, at *1-3 (S.D.N.Y. Dec. 19, 2014) (Dkt. No. 72). Accordingly, the Court will only briefly recite the facts here as taken from those that were undisputed and established at the summary judgment stage and from a declaration submitted by Hesham Zaghloul Eldesouky ("Eldesouky Decl.") (Dkt. No. 76-1) in connection with Plaintiffs' damages application now before the Court.

A. Factual Background

On January 13, 2011, plaintiffs Tasneem Company ("Tasneem") and Al-Yasmin Company ("Al-Yasmin"), through their principals Eldesouky and Abbas Elsayed Abbas ("Abbas"), respectively, entered into a contract with defendant General Trade Corporation, Inc. ("General Trade") to purchase 2, 000 metric tons of flaxseed at $420 per metric ton. Eldesouky Decl., Ex. A (contract dated Jan. 13, 2011). Eldesouky agreed to pay 10% of the total cost, Abbas 75%, and Aziz 15%. Id. (Second Article). After confirming that the flaxseed met the contracted-for quality specifications, Plaintiffs paid Aziz $721, 590 in installments over the next several months. Eldesouky Decl. ¶ 11.[1]

Sometime thereafter, Plaintiffs learned that Aziz had contracted, through Pyramid, with a Canadian company named Richardson International Limited ("Richardson") to purchase 4, 000 metric tons of flaxseed at $660 per metric ton. Id. at ¶ 12, Ex. C (contract dated Apr. 26, 2011). They further learned that Aziz had paid Richardson using $443, 750 of Plaintiffs' money. Id. at ¶ 14. Plaintiffs therefore contacted Richardson, and Richardson agreed to credit the money it had received from Aziz towards Plaintiffs' own purchase, but only if they agreed to acquire 4, 000 metric tons of flaxseed at the same price Pyramid had agreed to pay. Id. at ¶ 15. Plaintiffs agreed to these terms, and Aziz was to transfer $278, 360 to Richardson as the remainder of the money Plaintiffs had paid him. Id. at ¶¶ 16-18.[2] Ultimately, Aziz did not deliver this money either to Richardson or to Plaintiffs nor did Plaintiffs receive the flaxseed they contracted to purchase from General Trade. Id. at ¶ 18.

Plaintiffs began receiving shipments of flaxseed from Richardson in August 2011. Richardson's first shipment was 989.062 metric tons of flaxseed. Id. at ¶ 19. Richardson credited a pro rata portion of the money received from Aziz towards Plaintiffs' purchase. Id. Plaintiffs resold this flaxseed at a loss due to its poor quality. Id. at ¶ 20. Because Plaintiffs allegedly had a difficult time finding buyers for further shipments, Richardson then sold 750 metric tons of flaxseed on Plaintiffs' behalf, crediting a pro rata portion of Aziz's payment towards the flaxseed, which again resulted in a loss to Plaintiffs. Id. at ¶ 22. Richardson sent a third and final shipment of 242.193 metric tons of flaxseed to Plaintiffs in approximately September 2012; however, it was seized by Egyptian authorities due to the low quality of grain. Id. at ¶¶ 23, 25-26. In total, Plaintiffs received 1981.255 of the 4, 000 metric tons contractedfor from Richardson. During this period, Richardson also charged Plaintiffs storage fees for the flaxseed. Id. at ¶ 24.

B. Procedural History

On November 26, 2013, Plaintiffs moved for summary judgment against Aziz and default judgment against General Trade and Pyramid. (Dkt. Nos. 44-50). Neither Aziz nor the corporate defendants submitted any responsive papers, and the Court granted summary judgment against Aziz with respect to Plaintiffs' breach of contract claim in an amount to be determined upon further submissions by the parties. (Dkt. No. 72).[3] The Court then held a conference to discuss conducting an inquest on damages on January 22, 2015, but Aziz did not appear. (Dkt. No. 73). The Court now has before it Plaintiffs' submissions on damages and a separate application for attorneys' fees in connection with their motion for discovery-related sanctions. See Plaintiffs' Memorandum of Law in Support of Their Inquest on Damages ("Pl. Mem.") (Dkt. No. 76); Declaration of Mark H. Bierman ("Bierman Decl.") (Dkt. No. 79). Aziz has not submitted any opposition papers.

II. DISCUSSION

A. Choice of Law

Plaintiffs contend for the first time in their application for damages that the United Nations Convention on Contracts for the International Sale of Goods ("CISG") is applicable to the contract at issue in this action. Pl. Mem. at 5-6. The CISG is an international treaty governing contracts for the "sale of goods between parties whose places of business are in different States... when the States are Contracting States." Art. 1, § l(a).[4] Here, both the United States and Egypt are "Contracting States."[5] The CISG has been described as "a self-executing agreement, '' meaning that, unless parties to a contract explicitly opt out of the CISG, it governs. Delchi Carrier SpA v. Rotorex Corp., 71 F.3d 1024, 1027 (2d Cir. 1995); see also Hanwha Corp. v. Cedar Petrochemicals, Inc., 760 F.Supp.2d 426, 430-31 (S.D.N.Y. 2011). Therefore, the CISG would seem to apply to the contract at issue in this dispute since Tasneem and Al-Yasmin are Egyptian companies while General Trade and Pyramid are American; however, by waiting until this late juncture to raise the applicability of the CISG, Plaintiffs have waived it. See, e.g., Reed Const. Data Inc. v. McGraw-Hill Companies, Inc., No. 09-CV-8578 (JPO), 2014 WL 4746130, at *30 (S.D.N.Y. Sept. 24, 2014) (courts more likely to find "choice-of-law determination to have been waived [at] a late stage in litigation, such as at the point of making of summary judgment motions") (citation omitted).

In any event, because there is so little case law applying the CISG, courts often look to Article 2 of the Uniform Commercial Code ("UCC") for guidance, even though the UCC is not "per se applicable" to the CISG. Delchi Carrier SpA, 71 F.3d at 1028 (citation omitted); Macromex SRL v. Globex Int'l, Inc., No. 08-CV-114 (SAS), 2008 WL 1752530, at *2 (S.D.N.Y. Apr. 16, 2008), aff'd, 330 F.Appx. 241 (2d Cir. 2009). Therefore, as a practical matter, whether the UCC or the CISG governs is likely immaterial. Accordingly, the Court will ...


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