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Canon Solutions America, Inc. v. Lucky Games, Inc.

United States District Court, S.D. New York

April 28, 2017

CANON SOLUTIONS AMERICA, INC., Plaintiff,
v.
LUCKY GAMES, INC., Defendant.

          MEMORANDUM OPINION & ORDER

          KIMBA M. WOOD United States District Judge.

         Plaintiff Canon Solutions America, Inc. ("Canon") brings this diversity action against Defendant Lucky Games, Inc. ("Lucky") regarding an agreement between the parties for the maintenance of a printer leased by Lucky. Canon alleges that Lucky failed to return thousands of bottles of printer toner belonging to Canon. Lucky denies this and asserts a counterclaim for breach of contract. Canon has now moved for summary judgment. For the reasons stated below, the Court GRANTS Canon's motion in part.

         I. BACKGROUND

         A. Factual Background[1]

         Beginning in September 2010, Lucky entered into a series of maintenance agreements pursuant to which Canon would provide services and supplies-including printer toner-for a Canon printer Lucky leased for use in its printing business. See PI. 56.1 ¶¶ 1, 3, ECF No. 68. In June 2014, the parties entered into the maintenance agreement at issue here. Id. ¶ 1 (citing Midgley Decl. Ex. A ("Agreement"), ECF No. 64). Under the terms of the Agreement, Canon was to provide Lucky with enough toner to print 500, 000 pages per month. Id.¶3. To the extent Lucky's toner consumption exceeded that quantity by more than ten percent, Canon reserved the right to invoice Lucky for the additional cost. Id. Any unused toner remained Canon property, and Lucky was obligated to return it upon termination of the Agreement. Id. ¶5.

         During a review of the Lucky account in December 2014, Canon discovered that Lucky's toner orders had exceeded that ten-percent threshold. Id. ¶ 10. Lucky's refusal to pay the cost of this excess toner prompted further investigation by Canon. Id. ¶¶ 11-12. Canon reviewed Lucky's order history and compared it to the printer's internal counter, which tracked Lucky's actual toner usage. Id. ¶¶ 18, 20. Based on this review, Canon concluded that Lucky had ordered 2, 618 bottles of toner that were never used by the printer. See id.

         In February 2015, Canon informed Lucky of this discrepancy, as well as Lucky's unpaid account balance of $7, 069.92 in service fees and $123.57 in late fees. Id. ¶ 14. The parties then terminated the Agreement. Id. ¶ 17. According to Canon, the Agreement required Lucky to return any unused toner upon the Agreement's termination, but Canon reports that Lucky returned only 362 bottles. See Id. ¶ 21. The allegedly missing bottles of toner form the heart of this dispute.

         B. Relevant Procedural History

         Canon filed this action against Lucky on August 20, 2015, before the Honorable Analisa Torres. See Compl., ECF Nos. 1, 7. By stipulation, Canon amended its complaint on December 5, 2015 and alleged breach of contract, conversion, and unjust enrichment under New York law. Am. Compl. ¶¶ 30-57, ECF No. 22. In its answer, Lucky asserted a counterclaim for breach of contract. Answer 13-15, ECF No. 28. After discovery, Canon moved for summary judgment. PL Mot., ECF No. 63. On November 22, 2016, the case was reassigned to the undersigned.

         II. LEGAL STANDARD

         Summary judgment is appropriate where the record establishes that there is no "genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In making this determination, a court must "construe the evidence in the light most favorable" to the non-moving party and "draw all reasonable inferences" in the non-moving party's favor. Fincher v. Depository Tr. & Clearing Corp., 604 F.3d 712, 726 (2d Cir. 2010). The moving party has the burden of showing there is no genuine dispute of material fact. Jeffreys v. City of New York, 426 F.3d 549, 553 (2d Cir. 2005).

         A dispute is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Supreme Court and the Second Circuit have made clear that the existence of a mere "scintilla of evidence" in support of the nonmovant's position is not enough to defeat a properly supported motion for summary judgment. Id. at 252; see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (noting that the nonmovant "must do more than simply show that there is some metaphysical doubt as to the material facts"); Wilkins v. Mason Tenders Dist. Council Pension Fund, 445 F.3d 572, 580 (2d Cir. 2006) (quoting McClellan v. Smith, 439 F.3d 137, 144 (2d Cir. 2006)) (explaining that summary judgment cannot be defeated "by a factual argument based on conjecture or surmise").

         To demonstrate the existence of a genuine issue of material fact, "[t]he opposing party must come forward with affidavits, depositions, or other sworn evidence as permitted by [Rule 56], setting forth specific facts." Rule v. Brine, Inc., 85 F.3d 1002, 1011 (2d Cir. 1996). This evidence must be sufficiently probative for a reasonable factfinder to decide in favor of the nonmoving party on each element of his or her claim or defense. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986) ("Rule 56(c) mandates the entry of summary judgment. . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case ...."). The nonmoving party "cannot defeat the motion by relying 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) (citation omitted).

         III. DISCUSSION

         A. Statute of Limitations

         As a threshold matter, Lucky contends that this action is barred by the Agreement's statute-of-limitations provision. Lucky quotes this provision in its briefing, without indicating that Lucky omitted several words that materially change the meaning of the Agreement. That is astonishing, and ...


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