Summary
holding date midway between first and last dates of maturity of 54 unpaid bills of exchange was "reasonable intermediate date" from which to calculate interest under Section 5001
Summary of this case from LI & Fung (Trading) Ltd. v. Contemporary Streetwear, LLCOpinion
99 Civ. 8622 (RLE).
December 28, 2000.
OPINION ORDER
I. INTRODUCTION
This case was referred to the undersigned on October 19, 1999, after the parties agreed to conduct all proceedings before a magistrate judge. Discovery was completed April 30, 2000, and, at a conference before this Court on May 15, 2000, plaintiff was given permission to move for summary judgment. On June 30, 2000, plaintiff filed its motion pursuant to Rule 56(a) of the Federal Rules of Civil Procedure, requesting an award of damages for money owed. Defendant did not respond. For the following reasons, plaintiffs motion is GRANTED and an award of damages is entered against defendant.
II. BACKGROUND
Kookmin Bank ("Kookmin Bank") is a banking corporation formed and operating under the laws of the Republic of Korea. Kookmin Bank provides credit to Korean manufacturers who export goods to the United States. Compi. at ¶ 4. Kookmin Bank loaned money to Yechang Trading Co., Ltd. ("Yechang"), a Korea-based exporter of costume jewelry, until February 1998. Sanders Aff., Exh. D at ¶ 32; Cho Aff. at ¶ 3.
"Compl." refers to plaintiffs complaint, dated August 3, 1999.
"Sanders Aff." refers to the June 26, 2000 affidavit of Stuart L. Sanders in support of the motion for summary judgment.
"Cho Aff." refers to the June 12, 2000 affidavit of Byung Kwan Cho in support of the motion for summary judgment.
In or about March 1994, the president of Yechang, Byung Kwan Chun, formed defendant company, B.G. Fashion, Inc. ("B.G. Fashion"), an importer of costume jewelry manufactured in Korea. Cho Aff. at ¶ 4 Shortly thereafter, Yechang began to ship costume jewelry to B.G. Fashion. Id . It continued to do business with defendant until April 1997. Id . Yechang went out of business in or about June 1997. Id . at ¶ 12.
As payment for the shipments, Yechang drew bills of exchange in the amount of the shipments, addressed to defendant. Cho Aff. at ¶ 5. The bills were payable 270 days after the date of shipment. Id . Plaintiff was the payee on the bills of exchange, id . at ¶ 6, and defendant was the drawee. Id . at ¶ 8.
For each shipment, Yechang sent a copy of the bill of exchange along with the corresponding invoice, packing list, and other shipment documents to plaintiff. In turn, plaintiff sent the documents to defendant's bank, the Korea Commercial Bank of New York, with instructions to release the documents to defendant only upon defendant's acceptance of the bill of exchange. See Sanders Aff., Exh. D at ¶¶ 38-40; Cho Aff. at ¶ 7. Acceptance of the bill of exchange obligated defendant to pay its face amount on or before its maturity date to Kookmin Bank, or to the order of Kookmin Bank at Korea Commercial Bank of New York. See Sanders Aff., Exh. D at ¶ 43-44; Cho Aff. at ¶ 8.
Defendant failed to pay fifty-four of the bills that it accepted. Sanders Aff. at ¶ 20; Cho Aff. at ¶ 8. These unpaid bills, dated January 15, 1996, through April 14, 1997, have a face value of $847,170.09. Cho Aff. at ¶ 9. The maturity dates of the unpaid bills, and any deadline granted for their payment, have passed. Id . at ¶ 18. Plaintiff has since mitigated its damages by recouping a portion of the debt owed by defendant with the proceeds of a foreclosure sale of a building in which Yechang did business, and by seizing funds deposited by Yechang. See id . at ¶¶ 12-15. Plaintiff agrees to credit defendant on the outstanding bills of exchange in the amount of $146,580.26, leaving an unpaid principal balance of $700,589.83. Id . at ¶ 16.
On August 4, 1999, plaintiff sued defendant for the unpaid bills, claiming subject matter jurisdiction on grounds of diversity of citizenship pursuant to 28 U.S.C. § 1332(a)(1) and venue pursuant to 28 U.S.C. § 1391(a) and (c). Compl. ¶ 3. Plaintiff alleges defendant dishonored the bills of exchange by failing to pay their face amounts. See id . at ¶¶ 15-16. Plaintiff asserts it is subrogated to the rights of Yechang against defendant, and claims breach of contract and failure to pay. See id . at ¶¶ 21-28. On all counts, plaintiff seeks damages of $847,170.09, plus interest, from the dates that payments were due on the bills. Id .
On September 8, defendant served an answer denying all claims and asserting the following affirmative defenses: 1) the complaint fails to state a claim for which relief can be granted; 2) any damages were caused by plaintiffs assumption of risk or negligence, or by Yechang's negligence and breach of terms and conditions of agreements entered into with defendant; 3) plaintiff failed to include Yechang as an indispensable party; 4) the complaint should be dismissed under the doctrine of forum non conveniens. See Answer.
"Answer" refers to defendant's answer, dated September 8, 1999.
On March 28, 2000, prior to the completion of discovery, plaintiff served defendant with Requests for Admissions. Sanders Aff. at ¶ 7. Defendant did not respond to the requests within the thirty days allowed under Rule 36 of the Federal Rules of Civil Procedure. On June 30, 2000, plaintiff moved for summary judgment, claiming that: 1) there are no genuine issues of fact remaining which require a trial of plaintiffs first claim for relief; 2) defendant's affirmative defenses lack merit. See Sanders Aff. at ¶¶ 25-26; Mem. Supp. at 6-8. Defendant did not respond.
"Mem. Supp." refers to plaintiffs memorandum of law in support of the motion for summary judgment. dated June 26, 2000.
III. DISCUSSION
A. Standards for Granting Summary Judgment
A court shall grant a motion for summary judgment if it determines that "there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Under this standard, summary judgment is proper if "viewing the record in the light most favorable to the nonmoving party, the evidence offered demonstrates that there is no genuine issue of fact and that the moving party is entitled to judgment as a matter of law." Pension Benefit Guar. Corp. v. LTV Corp., 875 F.2d 1008, 1015 (2d Cir. 1989) (internal quotations omitted), rev'd on other grounds, 496 U.S. 633 (1990). In making this determination, the court does not resolve disputed factual issues, but reaches a conclusion as to whether there exists "a genuine and material issue for trial." Hudson Hotels Corp. v. Choice Hotels Int'l, 995 F.2d 1173, 1175 (2d Cir. 1993). The mere existence of disputed factual issues is not enough to defeat a motion for summary judgment. See Knight v. United States Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986), cert. denied, 480 U.S. 932 (1987). An issue of fact is "genuine" if it provides a basis for "a rational trier of fact to find for the non-moving party." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
The party moving for summary judgment bears the initial burden of demonstrating the absence of any genuine issue of material fact. See Consarc Corp. v. Marine Midland Bank, N.A., 996 F.2d 568 (2d Cir. 1993) (citing Adickes v. S.H. Kress Co., 398 U.S. 144, 157 (1970)). This burden may be met by demonstrating that there is a lack of evidence to support the nonmoving party's claim. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once the moving party satisfies this initial burden, the nonmoving party must set forth "specific facts showing that there is a genuine issue for a trial." Fed.R.Civ.P. 56(e).
B. Plaintiff's First Claim
In moving for summary judgment on its first claim, plaintiff relies on the fact that defendant failed to answer plaintiffs requests for admissions. See Mem. Supp. at 6. A request for admission must be answered in thirty days or the matters addressed therein will be deemed admitted. Fed.R.Civ.P. 36 (a). Matters which are admitted are deemed conclusively established. Id . at 36(b); Moosman v. Joseph Blitz, Inc., 358 F.2d 686, 688 (2d Cir. 1966); In re Fill, 68 B.R. 923 (Bankr. Ct. S.D.N.Y 1987). Here, defendant clearly failed to respond, and has therefore admitted the facts set forth in the requests. This Court takes those facts to be true. Moreover, even in the absence of requests to admit, the defendant's failure to respond to plaintiffs statement of material facts would provide a separate ground for considering the facts therein established. See Local Rule 56.1(c).
The failure to respond to a request for admission allows the court to enter summary judgment if the facts admitted are dispositive. See Donovan v. Carls Drug Co., Inc., 703 F.2d 650, 651 (2d Cir. 1983) (relying on Moosman v. Joseph Blitz, Inc., 358 F.2d at 688); Pakistan International Airlines v. Travel Link International, Ltd . 1991 WL 130182 *2 (S.D.N.Y. 1991).
Plaintiff argues that the facts set forth in the requests are dispositive of its first claim. The Court agrees. The facts establish that plaintiff is the payee on negotiable bills of exchange. A prima facie case of liability requires establishing that defendant accepted the instrument and dishonored it. See Chamberlain v. Amato, 259 A.D.2d 1048, 1049, 688 N.Y.S.2d 345 (4th Dept. 1999) ("Defendant's making of the instrument and failure to make payment were all that plaintiff, as holder, was required to establish in order to recover on the note."). Thus, to establish liability, plaintiff must show that defendant accepted the negotiable instruments at issue in this case, then failed to pay them. On review of the record, the Court agrees that defendant admitted the elements of plaintiffs first claim for relief: that it accepted the bills of exchange, that plaintiff is payee and holder in due course, and that defendant failed to pay the bills. See Sanders Aff. at ¶ 18.
Furthermore, defendant's affirmative defenses lack merit. Defendant contends that damages were caused by plaintiffs assumption of risk or negligence, or by Yechang's negligence and breach of terms and conditions of agreements entered into with defendant. See Answer at 4-5. However, defendant may not assert these defenses. Defendant admitted that plaintiff is a "holder in due course" of the bills of exchange. See Sanders Aff. at ¶ 18. Plaintiff is thus entitled to payment regardless of any defenses defendant might have derived from its agreement with Yechang. See N.Y. McKinney's Uniform Commercial Code § 3-305(2); European Asian Bank, A.G. v. G. Crohn Co., 769 F.2d 93, 96 (2d Cir. 1985).
Moreover, Yechang is not an indispensable party, as relief can be accorded among the parties in Yechang's absence. See Fed.R.Civ.P. 19(a). Finally, the complaint should not be dismissed under the doctrine of forum non conveniens, as there is no indication that dismissal would best serve the convenience of the parties and the ends of justice. See Murray v. British Broadcasting Corp., 81 F.3d 287, 290 (2d Cir. 1996).
IV. CALCULATION OF INTEREST
In addition to recovery of the unpaid bills of exchange, plaintiff seeks interest on the face amount of each of the unpaid bills from its maturity date. See Mem. Supp. at 4-5. Although plaintiff does not brief the Court on the issue of interest calculations, the Court applies New York law because jurisdiction is based on diversity of citizenship and significant transactions in this case occurred in New York. See Republic National Bank of New York v. Delta Air Lines, 2000 WL 1644483, * 1 (S.D.N.Y. 2000) ( citing Brink's Ltd. v. South African Airways, 93 F.3d 1022, 1030-32 ( 2d Cir. 1996)).
New York law imposes an affirmative mandate to award prejudgment interest. See N.Y. McKinney's C.P.L.R. § 5001(a); Gussak Realty Co. v. Xerox Corp., 224 F.3d 85, 93 (2d Cir. 2000); Indu Craft, Inc. v. Bank of Baroda, 87 F.3d 614, *617 (2d Cir. 1996). However, where damages are incurred at various times, as in this case, the law leaves to the discretion of the court the choice of whether to calculate prejudgment interest based upon the dates damages incurred or "a single reasonable intermediate date," which can be used to simplify the calculation. C.P.L.R. § 5001(b). See Marfia v. T.C. Zaraat Bankasi, 147 F.3d 83 (2d Cir. 1998) ( quoting 155 Henry Owners Corp. v. Lovlyn Realty Co., 231 A.D.2d 559, 647 N.Y.S.2d 30, 32 (2d Dep't 1996)); Conway v. Icahn Co., Inc., 16 F.3d 504, 512 (2d Cir. 1994) (courts have "wide discretion in determining a reasonable date from which to award pre-judgment interest").
To simplify the calculation in this case, the Court will calculate prejudgment interest on all fifty-four bills of exchange by reference to a single reasonable intermediate date. The bills of exchange were issued between January 13, 1996 and April 13, 1997, a period of fifteen months. See Sanders Aff. ¶ 19. The corresponding maturity dates of these bills ranged from October 9, 1996 to January 8, 1998. See Id . ¶ 22. The Court determines that a reasonable intermediate date is mid-way between the first and last maturity dates. Accordingly, prejudgment interest calculations cover the period from May 1, 1997 to the present day, December 27, 2000, or 1,306 days. The interest rate prescribed under New York C.P.L.R. §§ 5004 is 9% per annum, or 0.02466% per diem.
Plaintiff is no longer entitled to interest on the first eight bills of exchange because it has already deemed them paid through mitigation. Thus, interest calculations must be based on the remaining unpaid forty-six bills of exchange. of those bills, plaintiff has reduced one bill (Ref. No. YCTC-8206-27) significantly through mitigation. See Sanders Aff. ¶ 24. The new amount due on that bill is $2,943.79. Id . The total face value of bills on which interest is due is $700,589.83. Multiplication of that figure by the interest rate and number of days yields $225,631.6804.
V. CONCLUSION
For the reasons stated, plaintiffs motion for summary judgment is GRANTED. Defendant is HEREBY ORDERED to pay the outstanding bills of exchange, less the amount plaintiff has agreed to credit defendant, for a principal of $700,589.83 plus interest of $225,631.68, for a total of $926,221.51. The clerk should enter judgment for the plaintiff.