Opinion
01-CV-0106E(F)
July 19, 2002
MEMORANDUM and ORDER
Plaintiff commenced this action against defendant ("McBride") asserting claims for (1) breach of contract, (2) account stated and (3) quantum meruit related to several contracts for the sale of goods. Harris now seeks summary judgment in its favor. McBride has cross-moved for leave to amend its Answer. For the reasons stated hereinafter, McBride's motion will be denied and Harris's motion will be granted.
Preliminarily, it must be noted that — aside from seeking leave to amend its Answer — McBride has violated Rules 7.1(e) and 56 of the Local Rules of Civil Procedure ("LRCvP") by failing to submit a memorandum of law in opposition to Harris's motion for summary judgment or a statement responding to Harris's LRCvP 56 Statement ("Pl.'s Statement"). LRCvP 56 states:
"In any motion for summary judgment pursuant to Federal Rule of Civil Procedure 56, there shall be annexed to the notice of motion a separate, short, and concise statement of the material facts as to which the moving party contends there is no genuine issue to be tried. The papers opposing a motion for summary judgment shall include a separate, short, and concise statement of the material facts as to which it is contended that there exists a genuine issue to be tried. All material facts set forth in the statement required to be served by the moving party will be deemed admitted unless controverted by the statement required to be served by the opposing party. The motion for summary judgment may be denied if the movant fails to annex the statement required by this rule. (Emphasis added).
In other words, the moving party must set forth the material facts that it contends are not in dispute, whereas the non-moving party must then set forth the material facts that it contends are in dispute — i.e., material facts as to which the non-moving party contends there is a genuine issue of material fact. McBride, however, submitted no response to Harris's motion for summary judgment — other than to cross-move for leave to amend its Answer — which, standing alone, fails to satisfy the requirements of LRCvP 7.1(e) or 56. Consequently, this Court will deem admitted all facts in Harris's Statement that are supported by the record because McBride has failed to controvert any such factual allegations. LRCvP 56.
Amos v. Quebecor Printing, No. 96-CV-0072E(F), 1997 WL 251471, at *1 n. 1 (W.D.N.Y. Apr. 29, 1997) ("Inasmuch as [the non-moving party] failed to submit, as required by LRCvP 56, an opposing statement of material facts as to which it is contended that there exists a genuine issue to be tried, the facts contained in [the moving party's] statement are deemed admitted unless otherwise adequately controverted in the record. It is also noted that, inasmuch as [the non-moving party] submitted neither a memorandum of law nor a supporting affidavit, he additionally failed to comply with LRCvP 7.1(e) ***."); Holtz v. Rockefeller Co., 258 F.3d 62, 73-74 (2d Cir. 2001) ("A district court has broad discretion to determine whether to overlook a party's failure to comply with local court rules"). Although McBride has failed to properly oppose Harris's motion for summary judgment, this Court must first determine whether Harris has carried its initial burden under Rule 56 of the Federal Rules of Civil Procedure.
The facts are relatively straightforward. Harris received several purchase orders from McBride for the delivery of certain communications equipment to the United States military. Locke Decl., at ¶ 3, Ex. 1; Pl.'s Statement, at ¶¶ 2, 6. Harris supplied the equipment to the United States military as directed by McBride. Id. at ¶ 7; Locke Decl., at ¶ 4. The invoices for this equipment indicate that Harris made four shipments — the last on September 29, 2000 — and that the amount due as of November 28, 2000 was $869,867.32. Ibid.; Pl.'s Statement, at ¶ 7. The equipment was received without objection. Locke Decl., at ¶ 5. The payment for these shipments was due in full October 29, 2000. Id. at ¶ 6; Pl.'s Statement, at ¶ 8. McBride was paid in full by the United States military for the equipment McBride ordered from and delivered by Harris. Id. at ¶ 9. Despite demand for payment, McBride did not make any payments until January 9, 2001. Id. at ¶ 10. McBride made three payments of $19,000 each in January of 2001. Id. at ¶¶ 11-13; Locke Decl., at ¶¶ 7-8. On January 29, 2001 Harris's attorneys faxed to McBride a demand for payment of the $830,277.96 that remained due after McBride's payment of the $57,000. Compl., at ¶ 19, Ex. C; Marks Decl., at ¶ 3, Ex.1; Pl.'s Statement, at ¶¶ 14-15. McBride did not object to the January 29th statement of account. Id. at ¶ 16. Harris has received no further payments from McBride. Id. at ¶¶ 17-18; Locke Decl., at ¶ 9. Consequently, Harris commenced this action February 14, 2001. Pl.'s Statement, at ¶ 1. On March 28, 2001 McBride served an Answer that asserted no affirmative defense and admitted a debt to Harris in the amount of $830,277.96 (as of January 29, 2001). Id. at ¶¶ 3-5; Answer, at ¶ 10.
Marilyn Locke is the Director of Sales-Finance at Harris.
Harris shipped its product in calendar year 2000 on September 18, 28, and 29 (two shipments). Compl., at ¶ 11, Ex. B.
This amount includes interest of $10,352.32 calculated by Harris on the amount due at the rate of 12% per annum. It is not clear why Harris used a rate of 12% inasmuch as this rate does not appear to be part of the purchase orders or invoices — although such are barely legible. Compl., at Exs. A-B. Nonetheless, inasmuch as this amount of interest was included in the account Harris sent McBride on January 29, 2001 — the amount of which McBride judicially admitted in its Answer, — this Court adopts the amount of the account stated on January 29, 2001 but declines to adopt this rate of interest for the period after January 29, 2001. As discussed below, pre-judgment interest accrued on or after January 29, 2001 shall be computed at the rate of 9% in accordance with sections 5001(a) and 5004 of New York's Civil Procedure Law and Rules.
James V. Marks is an attorney for Harris.
Rule 56(c) of the Federal Rules of Civil Procedure ("FRCvP") states that summary judgment may be granted only if the record shows "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." In other words, after discovery and upon a motion, summary judgment shall be entered "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Summary judgment is thus appropriate where there is "no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Of course, the moving party bears the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995) (citing Adickes v. S.H. Kress Co., 398 U.S. 144, 157 (1970)). If the moving party makes such a showing, the non-moving party must then come forward with evidence of specific facts sufficient to support a jury verdict in order to survive the summary judgment motion. Ibid.; FRCvP 56(e).
With respect to the first prong of Anderson, a genuine issue of material fact exists if the evidence in the record "is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, at 248. Stated another way, there is "no genuine issue as to any material fact" where there is a "complete failure of proof concerning an essential element of the nonmoving party's case." Celotex, at 323. Under the second prong of Anderson, the disputed fact must be material, which is to say that it "might affect the outcome of the suit under the governing law ***." Anderson, at 248.
See also Anderson, at 252 ("The mere existence of a scintilla of evidence in support of the [non-movant's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-movant]."
Furthermore, "[i]n assessing the record to determine whether there is a genuine issue as to any material fact, the district court is required to resolve all ambiguities and draw all factual inferences in favor of the party against whom summary judgment is sought." St. Pierre v. Dyer, 208 F.3d 394, 404 (2d Cir. 2000) (citing Anderson, at 255). In other words, summary judgment is improper if there is any evidence in the record from which a reasonable inference could be drawn in favor of the non-moving party. Ibid.
Nonetheless, mere conclusions, conjecture, unsubstantiated allegations or surmise on the part of the non-moving party are insufficient to defeat a well-grounded motion for summary judgment. Goenaga, at 18.
See footnote 6.
Turning to McBride's request for leave to amend its Answer, defendant has admitted its breach of the contracts with Harris as well as its failure to pay the amount due thereunder. Answer, at ¶¶ 6, 10. McBride's admission in its initial Answer is a "'formal judicial admission [that is] conclusive against defendant in [a] motion for summary judgment." Bank of Am., N.A. v. Farley, No. 00 CIV. 9346 (DC), 2002 WL 5586, at *6 (S.D.N.Y. Jan. 2, 2002). Accordingly, such admissions are binding unless McBride's motion for leave to amend its Answer were granted. Such motion, however, will be denied.
See also W. World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 122 (2d Cir. 1990)) (finding that express concession in defendant's answer was a judicial admission where defendant never amended its answer); Lambert v. Credit Lyonnais, Nos. 93 Civ. 6876, 94 Civ. 2713, 2001 WL 357316, *1 (S.D.N.Y. Apr. 10, 2001) ("A judicial admission is conclusive, unless the court allows it to be withdrawn").
Although leave to amend "'shall be freely given when justice so requires,' FRCvP 15(a), such leave will be denied when an amendment is offered "in bad faith, would cause undue delay or prejudice, or would be futile." Leonelli v. Pennwalt Corp., 887 F.2d 1195, 1198 (2d Cir. 1989) (citation omitted). Allowing McBride to amend its Answer would be futile because the defendant fails to proffer any evidence that creates a genuine issue of material fact as to the existence of the contracts or the amount owed to Harris thereunder. See Bank of Am., at *6 (denying leave to amend Answer where such amendment would be futile in light of defendant's failure to rebut plaintiff's prima facie case of breach of contract and where amended Answer would contradict admission of the existence of the contract contained in initial Answer). Additionally, denying Harris's motion will not allow "discovery to proceed" because the discovery deadline was July 13, 2001.
See also Milanes v. Rust-Oleum Corp., 244 F.3d 104, 110 (2d Cir. 2001) (noting that, when a cross-motion for leave to amend a pleading is made in response to a motion for summary judgment, the district court may deny the proposed amendment as futile where it would fail — as here — to create a genuine issue of material fact).
Moreover, McBride's motion for leave to amend its Answer to add the affirmative defense that plaintiff sued the wrong party is also denied as futile because it is not supported by any evidence. Indeed, it is negated by a great deal of evidence produced by plaintiff. See Pl.'s Reply Mem., at 1-3; Kelly Decl., at Exs. 1-7; Bank of Am., at *6. Accordingly, McBride's motion requesting leave to amend its Answer is denied as futile because — regardless of the proposed amended Answer — McBride would continue to fail to create a genuine issue of material fact with respect to the existence of the contracts or its indebtedness thereunder.
Defendant's counsel's affidavit asserting that McBride's previous counsel made a "scrivener's error" where it admitted McBride's debt to Harris in its Answer filed March 28, 2001 is not evidence because it is not based on personal knowledge. See Sellers v. M.C. Floor Crafters, 842 F.2d 639, 643 (2d Cir. 1988) (holding that "a hearsay affidavit is not a substitute for the personal knowledge of a party" and is thus insufficient to successfully oppose a motion for summary judgment).
Harris argues that McBride's failure to submit a memorandum of law in support of its motion for leave to amend is a basis upon which this Court may deny McBride's motion. This argument fails to appreciate that LRCvP 7.1(e) — which Harris erroneously cites as LRCvP 7.2(e) in fn. 2 of its Reply Memorandum — only requires a memorandum of law in support of a movant's motion made under Rules 12, 56, and 65 of the FRCvP. LRCvP 7.1(e). Moreover, despite Harris's argument to the contrary, a non-movant's failure to file papers in opposition to a motion for summary judgment is not — standing alone — an appropriate basis upon which to grant the movant's motion. See FRCvP 56(e).
Denying McBride leave to amend its Answer is also proper because there has been undue delay inasmuch as it filed its initial Answer on March 28, 2001 — approximately nine months before it sought leave to amend and about six months after the close of discovery. Admittedly, delay alone is an insufficient basis upon which to deny leave to amend. Adamczyk v. City of Buffalo, 95-CV-1023E(M), 1998 WL 89342, at *2 n. 7 (W.D.N.Y. Feb. 23, 1998) (collecting cases). Here, however, McBride proposes amendments concerning matters about which McBride knew or should have known when it filed its initial Answer in March 2001 — to wit, whether it was indebted to Harris under the alleged contracts and whether McBride is a proper party to this action. Nonetheless, McBride offers no satisfactory explanation for its inordinate delay other than to allege that its previous judicial admission of indebtedness to Harris was a "scrivener's error" — without offering any evidence whatsoever of the purported scrivener's error or why it took McBride nine months to discover its judicial admission of a key issue. Under the circumstances, McBride's substitution of new counsel is no basis for amending its Answer — not to mention that it took McBride's new counsel several months to discover the purported scrivener's error and that such was only discovered after Harris had moved for summary judgment. Cf. Ansam Assocs., Inc. v. Cola Petroleum Ltd., 760 F.2d 442, 446 (2d Cir. 1985) (affirming denial of leave to amend complaint where asserted reason for delay was plaintiff's new counsel's discovery of information). Furthermore, denial of leave to amend is especially appropriate "where it appears that a [party's] purpose in asserting a new claim is [its] anticipation of an adverse ruling on the original claims." Bymoen v. Herzog, Heine, Geduld, Inc., 1991 WL 95387, No. 88 Civ. 1796(KMW), at *1 (S.D.N.Y. May 28, 1991). Finally, such an amendment would prejudice Harris inasmuch as the time for discovery has ended and McBride's proposed 180-degree reversal on the key issue of contractual obligation would require additional discovery. Accordingly, McBride's motion seeking leave to amend its Answer will also be denied because of McBride's undue delay in making such motion. See Cresswell v. Sullivan Cromwell, 922 F.2d 60, 72 (2d Cir. 1990).
In this diversity action, New York's substantive law governs. Thereunder, a plaintiff in a breach of contract action must prove (1) the existence of a contract, (2) performance by plaintiff, (3) breach of the contract by defendant and (4) damages. Terwilliger v. Terwilliger, 206 F.3d 240, 245-246 (2d Cir. 2000). Harris met its burden of making a prima facie case of breach of contract where it proffered evidence showing that several contracts existed between Harris and McBride, as evidenced by the purchase orders, Harris's performance, Harris's invoices, and McBride's failure to pay the sums due under the contracts. Ibid.; Compl., at Ex. A; Locke Decl., at ¶¶ 3-9, Exs. 1-2.
Neither party explicitly addressed the choice-of-law issue, but rather implicitly assumed that New York law applied by relying exclusively thereon. Accordingly, this Court will apply New York law because the parties have impliedly consented to such. See Tehran-Berkeley v. Tippetts-Abbett, et al., 888 F.2d 239, 242 (2d Cir. 1989).
Summary judgment is appropriate in a breach of contract action where the "language of the contract is unambiguous, and reasonable persons could not differ as to its meaning." Fulton Cogeneration v. Niagara Mohawk Power, 84 F.3d 91, 98 (2d Cir. 1996); VKK Corp. v. Nat'l Football League, 244 F.3d 114, 129 (2d Cir. 2001) (stating that, under New York law, "the initial interpretation of a contract 'is a matter of law for the court to decide'") (citations omitted). Accordingly and inasmuch as Harris has proffered a prima facie case of breach of an unambiguous contract, it will be entitled to summary judgment unless McBride has created a genuine issue of material fact. See Compagnie Financiere v. Merrill Lynch, 232 F.3d 153, 157-158 (2d Cir. 2000). McBride fails to offer any evidence to create such. Indeed, as discussed above, McBride fails to properly oppose Harris's motion for summary judgment. Moreover, McBride has admitted a breach of contract and the amount due thereunder. Answer, at ¶ 6, 10. Furthermore, McBride made several payments in reduction of its debt — id. at ¶ 10 — which serves as an implicit admission of McBride's obligation under the contracts. See Bank Of Am., at *5 (quoting Apex Oil Co. v. Vanguard Oil Serv. Co., 760 F.2d 417, 422 (2d Cir. 1985), for the proposition that "the existence of a contract may be established through conduct of the parties recognizing the contract"). Accordingly, Harris's motion for summary judgment will be granted as to its breach of contract claim because it is undisputed that there existed several contracts between plaintiff and defendant for the delivery of goods, that plaintiff performed thereunder and that defendant failed to pay the amounts due under the contracts. See Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522, 526 (2d Cir. 1994) (summary judgment appropriate in breach of contract action where non-moving party failed to submit competent evidence creating a genuine issue of material fact as to whether he was in default on his payment obligations); Bank of Am., at *3-5 (granting plaintiff's motion for summary judgment in breach of contract action where, inter alia, defendant's Answer admitted existence of the contract and the debt due thereunder); Rosa Textil, LDA v. Judy-Philippine, Inc., No. 00 Civ. 2620(DAB), 2001 WL 963993, at *1-2 (S.D.N.Y. Aug. 23, 2001) (granting summary judgment to a seller of goods on a breach of contract claim where defendant did not dispute the invoices or that plaintiff had delivered the goods ordered by defendant).
Harris asserts an alternative cause of action for account stated. Under New York law,
"an account stated 'is an agreement, expressed or implied, that an examination of the account between the parties has occurred, a statement of that account has been asserted, and accepted as correct.' 'An account stated may be implied when a creditor sends a statement of an account to a debtor and the debtor, who has a duty to examine the statement to ascertain whether it is correct or not, keeps it for a reasonable time without objecting to the correctness of the account.' 'An agreement may also be implied from the fact that the debtor makes a partial payment towards reducing the balance of the account.'" D.E.O., Inc. v. Durham, No. 99-CV-0036E(Sc), 2000 WL 1887830, at *2 (W.D.N.Y. Dec. 29, 2000) (citations omitted).
See also Rodkinson v. Haecker, 248 N.Y. 480, 484-485 (1928) ("An account stated is nothing more or less than a contract express or implied between the parties. It is an agreement which they have come to regarding the amount due on past transactions ***. As a general rule, where an account is made up and rendered, he who receives it is bound to examine the same [and if] he admits it to be correct it becomes a stated account, and is binding on both parties.").
Harris makes a prima facie showing of McBride's liability where it has shown that it sent — and McBride received — several invoices for the purchased goods as well as a fax demanding McBride to make current its account — which had a then-current balance of $830,277.96. Moreover, not only did McBride not object to the account stated — but it made several payments on the account and made several admissions of the debt owed to Harris — including judicially admitting such in its Answer. More importantly, McBride fails to proffer any evidence to create a genuine issue of material fact as to whether it is liable for the account stated by Harris on January 29, 2001. Accordingly, granting Harris's motion for summary judgment is alternatively based on its theory of an account stated. See Jim-Mar Corp. v. Aquatic Construction, Ltd., 600 N.Y.S.2d (3d Dep't) (granting seller of goods summary judgment where buyer retained several invoices without objection), leave to appeal denied, 82 N.Y.2d 660 (1993).
The Court does not address Harris's third cause of action for quantum meruit.
Pre-judgment interest must be added to the amount of the account stated by Harris on January 29, 2001. N.Y. C.P.L.R. 5001(a); Graham v. James, 144 F.3d 229, 239 (2d Cir. 1998). The award of pre-judgment interest is a substantive issue and is therefore governed by New York law. Terwilliger, at 249. Under New York law pre-judgment interest "shall be recovered upon a sum awarded because of a breach of performance of a contract ***." N.Y. C.P.L.R. 5001(a). Pre-judgment interest is calculated at the non-compounded rate of nine percent per annum. Id. at 5001(a), 5004. Harris is also entitled to post-judgment interest, which is calculated pursuant to 28 U.S.C. § 1961(a). See Indu Craft, Inc. v. Bank of Baroda, 87 F.3d 614, 619-620 (2d Cir.), cert. denied, 519 U.S. 1041 (1996). The Clerk of Court shall calculate the applicable rate of post-judgment interest.
Marfia v. T.C. Ziraat Bankasi, 147 F.3d 83, 90 (2d Cir. 1998) ("Plaintiff has not drawn our attention to, and we have not found, any New York case in which a court has awarded prejudgment interest calculated on anything other than a simple interest basis in a breach of contract case, other than cases decided in equitable proceedings."); cf. Spodek v. Park Prop. Dev. Assocs., 96 N.Y.2d 577, 579-580 (2001) (finding that pre-judgment interest may be awarded on the interest due under the terms of a promissory note was not an inappropriate compounding of interest).
Consequently, the defendant owes the plaintiff $830,277.96 plus pre-judgment interest, which is calculated as follows: the total amount of the account stated on January 29, 2001 of $830,277.96 plus prejudgment interest accruing thereafter thru the date of this judgment (July 19, 2002). The pre-judgment interest is calculated as follows: $830,277.96 × 9% = $74,725.01 ÷ 365 = $204.72 (daily interest) × 535 days (Jan. 30, 2001 — July 19, 2002) = $109,525.20 for a grand total as of July 19, 2002 of $939,803.16. Additionally, post-judgment interest shall accrue until this judgment is satisfied.
Accordingly, it is hereby ORDERED that defendant's motion to amend its Answer is denied, that plaintiff's motion for summary judgment is granted and that defendant shall within forty-five days of this Order pay plaintiff the amount of $939,803.16 plus post-judgment interest at a rate to be calculated by the Clerk of the Court, that defendant's failure to comply with this Order within the time herein provided will result in an award of attorneys' fees to plaintiff in an amount to be determined, and that the Clerk of the Court shall close this action.