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explaining that simultaneous pursuit of parallel lawsuits that involve the same events and claimed loss would be "obviously inefficient"
Summary of this case from Thornton Tomasetti, Inc. v. Anguillan Dev. Corp.Opinion
10 Civ. 9078 (MHD)
09-28-2012
QUANZHOU JOERGA FASHION CO., INC., Plaintiff, v. BROOKS FITCH APPAREL GROUP, LLC, Defendant.
MEMORANDUM & ORDER
:
Plaintiff Quanzhou Joerga Fashion Co. ("Quanzhou") filed this lawsuit to seek damages and fees for partial non-payment by defendant Brooks Fitch Apparel Group ("Brooks") for a shipment of garments sent from China to the defendant in the United States. The complaint, which asserted both contract and fraud claims, was amended once as a matter of right, though a proposed second set of amendments, to add additional fraud claims and two individual defendants, was rejected as futile by Memorandum and Order dated July 22, 2011.
In lieu of complete discovery, defendant moved for summary judgment, and plaintiff then moved in turn for the equivalent relief, although it limited its request to its contract claim for non-payment for the shipped goods. For the reasons that follow, we grant both parties' motions in part.
The court stayed discovery pending the resolution of defendant's summary-judgment motion. (See Order dated July 22, 2011).
Summary Judgment Standards
The court may enter summary judgment only if it concludes that there is no genuine dispute as to the material facts and that, based on the undisputed facts, the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); see, e.g., Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Feingold v. New York, 366 F.3d 138, 148 (2d Cir. 2004). "An issue of fact is 'material' for these purposes if it 'might affect the outcome of the suit under the governing law [while] [a]n issue of fact is 'genuine' if 'the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Shade v. Hous. Auth. of the City of New Haven, 251 F.3d 307, 314 (2d Cir. 2001) (quoting Anderson v. Liberty Lobby, Inc. 477 U.S. 242, 248 (1986)). It is axiomatic that the responsibility of the court in deciding a summary-judgment motion "is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried, while resolving ambiguities and drawing reasonable inferences against the moving party." Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986); see, e.g., Anderson, 477 U.S. at 255; Howley v. Town of Stratford, 217 F.3d 141, 150-51 (2d Cir. 2000).
The party moving for summary judgment bears the initial burden of informing the court of the basis for its motion and identifying those portions of the "pleadings, the discovery and disclosure materials on file, and any affidavits" that demonstrate the absence of a genuine issue of material fact. Fed. R. Civ. P. 56(c); see, e.g., Celotex, 477 U.S. at 323; Koch v. Town of Brattleboro, 287 F.3d 162, 165 (2d Cir. 2002). If the non-moving party has the burden of proof on a specific issue, the movant may satisfy its initial burden by demonstrating the absence of evidence in support of an essential element of the non-moving party's claim. See, e.g., Celotex, 477 U.S. at 322-23, 325; PepsiCo, Inc. v. Coca-Cola Co., 315 F.3d 101, 105 (2d Cir. 2002); Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995). If the movant fails to meet its initial burden, however, the motion will fail even if the opponent does not submit any evidentiary materials to establish a genuine factual issue for trial. See, e.g., Adickes v. S.H. Kress & Co., 398 U.S. 144, 160 (1970); Giannullo v. City of New York, 322 F.3d 139, 140-41 (2d Cir. 2003).
If the moving party carries its initial burden, the opposing party must then shoulder the burden of demonstrating a genuine issue of material fact on any such challenged element of its claim. See, e.g., Beard v. Banks, 548 U.S. 521, 529 (2006); Celotex, 477 U.S. at 323-24; Santos v. Murdock, 243 F.3d 681, 683 (2d Cir. 2001). In doing so, the opposing party may not rest "merely on allegations or denials" of the factual assertions of the movant, Fed. R. Civ. P. 56(e); see, also, e.g., Goldstein v. Hutton, Ingram, Yuzek, Gainen, Carroll & Bertolotti, 374 F.3d 56, 59-60 (2d Cir. 2004), nor may it rely on its pleadings or on merely conclusory factual allegations. See, e.g., Weinstock v. Columbia Univ., 224 F.3d 33, 41 (2d Cir. 2000). It must also "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); see also Woodman v. WWOR-TV, Inc., 411 F.3d 69, 75 (2d Cir. 2005). Rather, it must present specific evidence in support of its contention that there is a genuine dispute as to the material facts. See, e.g., Celotex, 477 U.S. at 324; Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998); Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522, 526 (2d Cir. 1994).
If both sides move for summary judgment, the court must separately assess the adequacy of each motion. Thus, if neither movant satisfies its Rule 56 burden, the court must deny both motions. See, e.g., Marvel Entm't, Inc. v. Kellytoy (USA), Inc., 769 F. Supp.2d 520, 524 (S.D.N.Y. 2011) (citing Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993)).
The Factual Record
1. The Pertinent Events
Quanzhou is a China-based manufacturer of garments. (Pl. Am. Compl. ¶¶ 3-4). It lacks an exporter's license, which is apparently required for the company to do the shipping of its goods overseas. It therefore must use the services of a properly licensed company to do the actual shipping. (See Aug. 22, 2011 Affidavit of Thomas Carulli ("Second Carulli Aff.") Ex. 10 (Tr. of July 11, 2011 conf.) at 16-17). In the case of the shipment currently at issue, it hired an entity known as Xiamen Unibest Import & Export Co. ("Unibest") to handle the shipment of the goods. (See Defendant's Rule 56.1 Statement ("Def. St.") at ¶¶ 1-2; May 18, 2011 Affidavit of Eli Safdieh ("Safdieh Aff. 1") Ex. 3).
The goods were loaded on a vessel operated by the Ocean Navigator Express Line on April 29, 2010. (Pl. Am. Compl. ¶ 6; Def.'s Mem. Of Law in Supp. Of Mot. for Summ. J. ("Def. Mem.") at 5). The pertinent bill of lading, issued May 5, 2010, identified the consignee as Brooks. (See Safdieh Aff. 1 Ex. 3; Def. St. ¶ 8). The only exhibit in the record reflecting that document is a copy of what is labeled a "FAX COPY", and it contains a notation stating "COPY NON-NEGOTIABLE". (See Affidavit of Wolfgang Schmid ("Schmid Aff.") Ex. 1; Safdieh Aff. 1 Ex. 3).
From e-mail and other exchanges contained in the record it appears that, prior to shipment, defendant complained concerning the color found on some samples sent by Quanzhou to Brooks. (Safdieh Aff. 1 ¶ 5). Although this problem was apparently resolved, Quanzhou was concerned with whether Brooks would pay in full for the ordered goods after Brooks indicated that it would not pay FOB, that is, prior to loading, or during transit. (Pl. Am. Compl. ¶ 9; Safdieh Aff. 1 Ex. 14 (4/28/10 email from Eli Safdieh to Moe Cohen)). Plaintiff therefore utilized a China-based middleman, Moe Cohen, to seek assurances from Brooks that it would pay in full, and ultimately defendant provided a written, though unsigned, "guarantee" that it would pay in full after the clothing was received. (May 10, 2011 Affirmation of Moe Cohen ("Cohen Aff. 1") at ¶¶ 2, 6-8; Ex. D).
Following receipt of this guarantee document, the shipment was sent and delivered to Brooks, which accepted the cargo, although Brooks apparently initially complained about delay in receipt of the goods. (Cohen Aff. 1 ¶¶ 2-3, 8; Ex. E). The delivery was reportedly made by the carrier without confirmation that payment had been, or was being, made by the consignee. (Pl. Am. Compl. ¶ 9). As it turned out, Brooks did not pay the full amount due at the time of delivery, but soon made payments, via Mr. Cohen's company Perine International Inc., totaling $129,735.00 on a total bill of $209,390.00, thus leaving $79,625.00 still owing. (Def. Mem. 7, 12; Pl. Am. Compl. ¶¶ 10-11). It is this shortfall in payment that triggered the current lawsuit.
Defendant does not dispute that it owes this sum. (See May 18, 2011 Affidavit of Thomas Carulli ("Carulli Aff. 1") Ex. 11 (8/18/10 email from Thomas Carulli, Esq. to Caspar Ewig)). Indeed, at one point its attorney sent a post-dated check to plaintiff's attorney for a portion of this amount, in the apparent belief that the parties had agreed to a settlement in which Brooks would receive the original bill of lading. (See Carulli Aff. 1 Exs. 11-12). Plaintiff's attorney, however, prematurely deposited the post-dated check and was refused payment, and in any event plaintiff declined to proffer the bill of lading. (See Ewig Aff. 2 ¶ 5; Carulli Aff. 1 Ex. 13; Def. St. ¶¶ 19-20).
Plaintiff's counsel also suggests that the settlement failed because defendant conditioned it on the discontinuance of a parallel lawsuit pending in China, as well as the production of the bill of lading. (See May 20, 2011 Affirmation of Caspar F. Ewig ("Ewig Aff. 2") at ¶ 5).
2. This Lawsuit
Plaintiff's complaint seeks full payment based on a claim of breach of contract. (Pl. Am. Compl. ¶ 13). It also asserts several additional claims. One is for $10,000.00, for additional costs encountered in the purchase of fabrics, apparently referring to materials that were not ultimately used to manufacture the shipped garments because samples of that fabric proved to be non-conforming. (Id. at ¶¶ 15-16). Quanzhou also asserts a claim for fraud, premised on the allegation that Brooks had no intention of paying when it entered the contract and provided the guarantee, and that subsequently it demanded a discount as a predicate to any payment. (Id. at ¶¶ 18-22). Finally, plaintiff seeks fees incurred in this case based upon its contention that such an award is authorized by the United Nations Convention on Contracts for the International Sale of Goods, 19 I.L.M. 668 (1980). (Id. at ¶¶ 24- 29).
At present, Brooks represents that it refuses to pay the remainder due for the shipment until it receives from defendant or its export representative the original bill of lading as documentation of title. (See Carulli Second Aff. Ex. 10 (Tr. of July 11, 2011 conf.) at 5-6, 11). Plaintiff has refused to provide that original document to defendant, contending that it is not a negotiable bill of lading, and hence is not required to be surrendered to the buyer. (See, e.g., Aug. 22, 2011 Affidavit of Thomas Carulli ("Second Carulli Aff.") Ex. 10 (Tr. of July 11, 2011 Conf.) at 11, 13, 17-18; Pl. Mem. Of Law in Opp'n to Def. Mot. For Summ. J. ("Pl. Opp'n") at pp. 7-8). Quanzhou also offers the explanation that it needs the original bill of lading for a related litigation, which we describe below. (Ewig Aff. 2 ¶ 5).
In defendant's papers it alludes to delays in shipment but ultimately it agreed through its counsel and in its papers that it was prepared to pay the additional amount due if it received the original bill of lading. (See Def. Mem. 1).
3. The China Litigation
It turns out that this is not the only lawsuit that has been brought in connection with this shipment of clothes. As reported by defendant and eventually conceded by plaintiff, the exporting company Unibest filed a lawsuit in China against the carrier, in which it seeks not only the same unpaid $79,655.50 but the balance of the bill, which Brooks has concededly already paid. (Def. Mem. 1-2; Ewig Aff. 2 ¶ 5). That suit is apparently based on the claim that the carrier acted improperly in releasing the cargo to Brooks without first ascertaining that payment had been made. (Ewig Aff. 2 ¶ 9).
As for the status of that lawsuit, we twice directed plaintiff to provide the necessary details by declaration, and plaintiff has both times failed to do so. (See Order dated July 22, 2011). Based on plaintiff's unexcused violation of those orders and consistent with the terms of our July 22, 2011 order, we deem as true the representation by defendant that judgment has been entered in favor of Unibest in that proceeding for the full amount of the original bill, that an appeal from that judgment may be pending, that Quanzhou controls that lawsuit while acting through Unibest, and that the suit is for the benefit of Quanzhou.
Entirely apart from our order, plaintiff's counsel has made plain that the Chinese lawsuit is being pursued for the benefit of Quanzhou, and it appears that plaintiff here is controlling the litigation. (Ewig Aff. 2 ¶¶ 1, 9).
ANALYSIS
A. Plaintiff's Motion
On plaintiff's current motion it seeks judgment solely on its first contract claim. It bases that request on (1) the fact that defendant has conceded that it owes $79,655.50 and (2) its contention that Brooks is not entitled to the original bill of lading. (See Pl. Opp'n 1, 7). For reasons that follow, we conclude that the amount owed may be deemed established but that the right to possession of the bill of lading is a triable issue.
We note that although plaintiff does ask for partial summary judgment, its briefing does not address any specific basis for such relief, and instead focuses on the appropriateness of denying defendant's motion. That said, the evidentiary record on the current motion and the pre-motion articulation by plaintiff's counsel of his client's legal theory allows us to address its motion in greater detail than would be warranted by its memorandum of law.
As we have noted, defendant has not contested the fact that it received the goods in question and that it has paid a sum that leaves a balance owed of $79,655.50. (Def. St. ¶ 18.) Accordingly, there is no meaningful dispute that this figure represents a monetary obligation of the defendant.
The question of whether, as the buyer, Brooks is entitled to possession of the original bill of lading is a murkier proposition. According to plaintiff, the purchaser has no such right to the bill of lading unless that bill is negotiable since, in that circumstance, "whoever physically [holds] the bill of lading itself has title to the goods." Ancile Inv. Co. v. Archer Daniels Midland Co., 784 F. Supp.2d 296, 299 (S.D.N.Y. 2011). Indeed, plaintiff has argued at one point that the bill in question is a non-negotiable bill of lading, and that this status relieves it of any obligation to provide it to Brooks. (See Second Carulli Aff. Ex. 10 (Tr. of July 11, 2011 conf.) at 11, 13, 15; Pl. Opp'n 7-9).
"A bill of lading is simply an acknowledgment by a carrier that it has received the goods for shipment. Second, it is a contract of carriage; third, if the bill is negotiated, it controls possession of the goods and is one of the indispensable documents in financing the movement of commodities and merchandise." Ancile, 784 F. Supp.2d at 299 n.1 (quoting Royal & Sun Alliance Ins., PLC v. Ocean World Lines, Inc., 612 F.3d 138, 141 n.3 (2d Cir. 2010)); see also Hup Aik Huat Trading Pte Ltd. v. 900 Bags of Malabar Garbled Black Pepper, 115 F. Supp.2d 529, 533 (D. Md. 2000) ("Generally, bills of lading can serve three distinct functions: '[f]irst a receipt for the goods; second; a contract for their carriage; and, third, a documentary evidence of title to the goods.'" (citing In re Chateaugay Corp., 78 B.R. 713, 717 (Bankr. S.D.N.Y. 1987)).
The functions actually played by a particular bill of lading depend on the nature of the bill, that is, whether it is negotiable or not. Negotiable bills of lading are a way of protecting a distant seller from fraud or insolvency of a buyer. Dorlan Mgmt. Inc. v. M/V MSC Daniela, 1997 WL 411930, at *3 (S.D.N.Y. July 22, 1997), vacated on other grounds on reconsideration, 1997 WL 626399 (S.D.N.Y. Oct. 9, 1997) ("In order to protect the distant seller from an insolvent or fraudulent foreign buyer, the buyer gets possession of the original bill of lading by paying for the goods."). "The seller tenders shipping documents, including a negotiable bill of lading, rather than goods to the buyer. By paying for the documents, the buyer gets possession of the original bill of lading. Possession of the bill entitles him to possession of the goods; it represents the goods and conveys title to them." Allied Chem. Int'l Corp. v. Companhia de Navegacao Lloyd Brasileiro, 775 F.2d 476, 481 (2d Cir. 1985); see also Hangzhou Leather Prods. Indus. v. Air City, Inc., 1997 WL 722700, at *1 (S.D.N.Y. Sept. 19, 1997) (quoting Allied Chem.).
A bill of lading is negotiable if the bill "states that the goods are to be delivered to the order of a consignee; and . . . does not contain on its face an agreement with the shipper that the bill is not negotiable." 49 U.S.C. § 80103(a). Bills that consign shipments directly to a party are non-negotiable. See, e.g., Ancile, 784 F. Supp.2d at 299 n.1, 309 n.7 (where the bills of lading were issued "To the Order of" defendant, "they were negotiable documents, and therefore controlled possession of the underlying goods" and thus "the holder of the bill of lading would have the exclusive right to take possession of the underlying goods"); Klockner, Inc. v. M/V Faurei, 1982 U.S. Dist. LEXIS 9760, at *1 (S.D.N.Y. Sept. 30, 1982) (bills "consign[ing] the shipment directly to [plaintiff] . . . are non-negotiable straight bills of lading", but bills "consign[ing] the cargo to the order of [plaintiff] . . . [are] negotiable"); Mairs v. Baltimore & Ohio R.R. Co., 175 N.Y. 409, 411, 67 N.E. 901, 902 (1903) ("[The bill of lading] had been altered by the insertion of the words 'order of and notify' just before the name of the consignee, thus changing the bill of lading into a negotiable instrument."); Goldstein v. Societa Veneziana, 193 A.D. 168, 173, 183 N.Y.S. 460, 463 (1st Dep't 1920) ("The bill of lading did not have the words 'order of' thereon immediately before the name of the person upon whose order the good received were deliverable . . . It was, therefore, a non-negotiable bill."); see also Thypin Steel Co. v. Certain Bills of Lading, 2002 WL 31465791, at *4 (S.D.N.Y. Nov. 4, 2002), vacated in part on other grounds, Thypin Steel Co. v. Asoma Corp., 82 Fed. App'x 738 (2d Cir. 2003) (discussing the U.C.C.).
The difference between negotiable and non-negotiable bills is that a negotiable bill "functions as a document of title." Hup Aik, 115 F. Supp.2d at 533 (quoting T. Schoenbaum, 2 Admiralty and Maritime Law § 10-11 at 48-49 (2d ed. 1994) (emphasis in original)). Thus, "[t]he goods are merged with the instrument and the owner of the bill of lading has title to the goods. The seller can thus retain control of the goods in transit by requiring the payment of the purchase price before the bill is delivered to the buyer." Id.
In the case of a negotiable bill of lading, production of the original bill is required for delivery of the goods. See Dorlan Mgmt. Inc., 1997 WL 411930, at *4 ("A carrier may not deliver goods to a buyer until presented with the original bill of lading." (citing Allied Chem., 775 F.2d at 481)). Where a negotiable bill of lading has been issued, "the carrier will be discharged only by delivery to the holder of the bill. The piece of paper on which the bill is written now becomes indispensable; the goods are locked up in the bill, in the same way that the debt is merged in the instrument." Gilmore & Black, The Law of Admiralty § 3-4, p. 96 (2d ed. 1975) (citations omitted).
Under federal law, a non-negotiable bill of lading is one that "states that the goods are to be delivered to a consignee." 49 U.S.C. § 80103(b). "The indorsement of a nonnegotiable bill does not . . . make the bill negotiable; or . . . give the transferee any additional right." Id. Furthermore, "[a] common carrier issuing a nonnegot iable bill of lading must put 'nonnegotiable' or 'not negotiable' on the bill." Id.
A non-negotiable bill appears to function more like a receipt or contract, and the production of the original bill is not actually a precondition to the delivery of the goods. "A carrier which has issued a non-negotiable bill of lading normally discharges its duty by delivering the goods to the named consignee; the consignee need not produce the bill or even be in possession of it; the piece of paper on which the contract is written is of no importance in itself." Gilmore & Black, The Law of Admiralty § 3-4, p. 96 (citations omitted); see also Schoenbaum, 2 Admiralty & Mar. Law § 10-11 (5th ed. 2011) (noting that "[t]he carrier is not required to take up and cancel a straight bill of lading at the time of delivery of the goods") (emphasis added); Pere v. Marquette Ry. Co. v. Chi. & E.I.R. Co., 255 F. 40, 41 (7th Cir. 1918) ("With the straight bills of lading, the delivering carrier, being informed by the waybill who is the consignee, need concern itself only with the identity of the person to whom it delivers the goods; surrender of the bills of lading not being required."); cf. Delphi-Delco Elec. Sys. v. M/V Nedlloyd Europa, 324 F. Supp.2d 403, 425 n.12 (S.D.N.Y. 2004) (discussing recent development of liner waybills as non-negotiable receipts: "Accordingly, in contrast to the traditional bill of lading, the liner waybill is non-negotiable. The goods may be delivered to the consignee who identifies himself as such. The waybill is not a document of title, but merely conveys information. Since the physical document is no longer necessary to the transaction, the liner waybill may be transmitted electronically or telexed between the parties. As a non-negotiable bill of lading, the liner waybill is subject to the Pomerene Act and the Hague Act . . .") (quoting Schoenbaum, 2 Admiralty & Mar. Law § 10-11).
Defendant has proffered a copy of at least one version of the bill of lading in this case, issued by the carrier -- Ocean Navigator Express Line. (See Schmid Aff. Ex. 1 (Bill of Lading)). The document is, as noted, labeled FAX COPY and has indicia of both negotiable and non-negotiable bills of lading. The consignee is specifically named as "Brooks Fitch Apparel LLC" -- the bill is not "to the order of" Brooks Fitch. However, it is marked "Copy Non-Negotiable", implying perhaps that the original document is negotiable. It also fails to state anywhere else that it is a non-negotiable document.
Defendant was able to obtain delivery of the goods without presenting the original bill of lading to the carrier. (Pl. R.56.1 Counter Stat. at ¶ 23; Second Carulli Aff. Ex. 10 (Tr. of July 11, 2011 conf.) at 17-18). However, it urges that "according to the standard terms and conditions of any bill of lading, which constitutes the document of title, the owner of the cargo covered under said bill of lading must relinquish the original bill of lading in exchange for full payment, thus transferring the title of the goods to the buyer." (Schmid Aff. ¶ 6). Defendant also proffers testimony by its principal that it is industry practice for the shipper to release the bill of lading to the purchaser in all cases. (Safdieh Aff. 1 ¶ 15). It also appears to have been defendant's understanding, seemingly based on discussions with Mr. Cohen, that it would receive the original document in exchange for the payment for the goods. (See, e.g., Cohen Aff. Ex. C (4/26/10 email from Eli Safdieh to Moe Cohen); Carulli Aff. 1 Ex. 12 (8/31/10 email from Thomas Carulli, Esq. to Moe Cohen)).
Plaintiff responds that this is a straight bill of lading, and that it therefore had the right of "stoppage in transit" in the event that payment for the goods was not received, (Pl. Opp'n 7). It thus asserts that the bill is a non-negotiable bill and, by implication, that it was free to refuse to surrender the bill even upon payment. (See, e.g., Carulli Second Aff. Ex, 10 (Tr. of July 11, 2011 conf.) at 11, 13, 17-18). It also argues that even if Brooks was arguably entitled to the bill of lading on payment, it breached the agreement by not paying promptly and thereby forfeited any such right to the bill. (Pl. Opp'n 8).
The version of the bill of lading in the record leaves open some question as to whether the original is negotiable or non-negotiable. Moreover, there is evidence in the record of an understanding by Brooks that it would receive the original bill of lading at the time of delivery as a prerequisite to payment. (See, e.g., Cohen Aff. Ex. C (4/26/10 email from Eli Safdieh to Moe Cohen); Carulli Aff. 1 Ex. 12 (8/31/10 email from Thomas Carulli, Esq. to Moe Cohen)). It may also be argued that the China litigation, insofar as it targets the carrier, rests on an implicit assumption that the bill of lading was negotiable. See, e.g., Dorlan Mgmt., Inc., 1997 WL 411930, at *4 (citing Allied Chem., 775 F.2d at 481). Since, however, plaintiff has refused to comply with disclosure orders concerning that other lawsuit, this is a matter of speculation. Given these issues, it cannot be said as a matter of law that defendant had no right to possession of the bill of lading in this case either as a document of title or as a matter of contract.
Finally, we note that plaintiff at one point indicates that if Brooks had paid for the goods on time, Quanzhou would have turned over the bill of lading. (Pl. Opp'n 7). As we have noted, however, it asserts that defendant's failure to pay at the time amounts to a breach that relieves plaintiff of any duty, if ever there were one, to provide the bill of lading. (Id.) The short answer here is that the course of negotiations regarding payment timing and whether the bill of lading was to be provided at the time are so murky as to leave open the question of whether Brooks was in breach in not paying in full post-delivery absent production of the bill of lading.
Summary judgment for plaintiff must therefore be denied with respect to this issue.
B. Defendant's Motion
Brooks seeks summary judgment on all of plaintiff's claims as well as sanctions for violation of court orders. We briefly review these issues seriatim.
1. The First Contract Claim
As noted, Quanzhou's first claim is premised on a straightforward contract-breach theory, and that theory is resolvable in plaintiff's favor only in part, that is, defendant owed $79,655.00 for the shipment. The question remains whether the other issue -- defendant's putative right to the bill of lading as a prerequisite for payment -- may be resolved in favor of defendant.
In seeking judgment on the current record, Brooks argues that it was entitled to receipt of the bill of lading because that is the custom in the industry and because all bills of lading are documents of title. (Def. Mem. 12-13 (quoting J.C.B. Sales Ltd. v. Wallenius Lines, 124 F.3d 132, 135 (2d Cir. 1997)). It also contends that plaintiff, in the course of pursuing the separate China lawsuit, is making false representations that it has not been paid at all for the goods in question, and defendant asserts, not implausibly, that plaintiff is seeking a double recovery. (Id. at 13).
Defendant's complaint about plaintiff's asserted misstatements in the China litigation may be well taken, but they do not dictate the disposition of the current motion. If plaintiff has already collected an award in the other lawsuit, defendant may have a valid defense akin to the affirmative defense of accord and satisfaction. However, the record does not reflect that the judgment has been satisfied, and defendant has not pled such a defense in the plethora of affirmative defenses found in its answer to the amended complaint. The alleged misrepresentations in the China lawsuit are a matter for the Chinese courts to address; such misconduct would not justify dispositive sanctions here. Finally, as noted, plaintiff has violated our orders to disclose the status of the China litigation, and it has failed to justify its defiance of those orders. This failure triggers the sanctions outlined anticipatorily in our July 22 order, and confirms plaintiff's control of the China litigation, but it too does not demonstrate a basis for summary judgment.
By our July 22, 2012 order we left open the possibility for plaintiff to offer a valid excuse in its opposition to defendant's summary-judgment motion, but it has failed to do so. All that it proffers is the unenlightening assertion that to comply would somehow prejudice its China lawsuit. This assertion is entirely unconvincing, and only reinforces the suspicion that plaintiff is seeking to perpetrate a fraud on the court in China.
As for the more pertinent issue of the obligation, if any, of the seller to provide the bill of lading to the purchaser, the passage that defendant cites from J.C.B. Sales does not directly address the issue of whether Brooks was entitled to receive the original bill of lading as a predicate to full payment. Moreover, on this issue we note that neither side has cited any legal authority directly on point.
As for the alternative ground for requiring production of the letter of credit -- that is, one based in contract neither side has offered meaningful evidence of any explicit agreement on that point. The only pertinent information is testimony by defendant's principal, Mr. Safdieh, that it is industry practice for the bill of lading to be supplied and that his company customarily receives that document. (Safdieh Aff. 1 ¶ 15). These assertions are not contradicted by plaintiff through competent evidence or otherwise, but they do not suffice in themselves to justify summary judgment.
As a general matter, contract claims may not be disposed of by summary judgment "if the resolution of a dispute turns on the meaning of an ambiguous term or phrase." Fed. Ins. Co. v. Am. Home Assurance Co., 639 F.3d 557, 567 (2d Cir. 2011) (citing inter alia State v. Home Indem. Co., 66 N.Y.2d 669, 671-72, 495 N.Y.S.2d 969, 971 (1985)). Ambiguity is to be found if the language used is susceptible to at least two reasonable interpretations. See, e.g., Home Indem., 66 N.Y.2d at 671, 495 N.Y.S.2d at 971. That said, summary judgment may be appropriate even if the contractual language is ambiguous, provided that the available parol evidence unambiguously demonstrates its meaning. See, e.g., Fed. Ins., 639 F.3d at 567 (quoting Compagnie Financiere de CIC v. Merrill Lynch, Pierce, Fenner & Smith Inc., 232 F.3d 153, 158 (2d Cir. 2000)).
Here there is no written contract embodying an explicit requirement for turning over the bill of lading, and the negotiations for the shipment -- both those predating and those postdating the carriage of the goods -- are decidedly murky. Though evidence pertinent to industry practice may be offered if the agreement is otherwise ambiguous, it is normally to be provided in the form of expert testimony. See, e.g., In re PCH Assocs., 804 F.2d 193, 196 (2d Cir. 1986). Mr. Safdieh is a principal of the defendant and thus not in a position to provide such independent expert testimony, and to the extent that he is merely reporting the experience of his company, his testimony is not sufficient to clarify the uncertainty of the actual meaning of whatever agreement was reached regarding shipment.
In sum, defendant's motion for summary judgment on the first claim is denied.
2. The Second Contract Claim
Plaintiff's second claim, which is styled as one for breach of contract, appears to involve a $10,000.00 purchase of white fabric from defendant for use in manufacturing garments for plaintiff, fabric that was not used for this purpose because Brooks rejected the samples sent to it as non-conforming.
Defendant moves for judgment on this claim, based on the contention that it rejected the samples because its order specified that the garments were to be ivory colored, and the samples sent to it -- and presumably the balance of the fabric that plaintiff purchased -- were white. (Def. Mem. 10; Def. St. ¶ 34). These factual contentions, reflected in the affidavit of defendant's principal, Mr. Safdieh, are not disputed by plaintiff. (See Safdieh Aff. ¶¶ 5-7). Moreover, plaintiff never alludes to this claim in its briefing and offers no evidence that would put in genuine dispute whether it was entitled to this payment. Indeed, the only documentation supplied by plaintiff consists of two sheets of paper of unidentified provenance that refer to various unspecified items of clothing and are unaccompanied by any explanation of their meaning. (Ewig Aff. Exs. B & C).
Indeed, plaintiff's counsel conceded the inadmissibility of these documents and represented that they would be withdrawn if a declaration were not submitted by the end of briefing. (Id. at 2). No such declaration has been provided, and we therefore disregard those documents.
Summary judgment is granted to defendant on this claim.
C. The Fraud Claim
Plaintiff's third claim is premised on the contention that, after defendant had indicated that it would not pay for the shipment FOB or while in transit and that it wanted a discount, it subsequently promised to pay in full upon delivery, and thereby induced plaintiff to authorize the cargo to be shipped. (Pl. Am. Compl. ¶¶ 18-22; Cohen Aff. 1 ¶ 11). Plaintiff goes on to allege that defendant made this promise (in the form of the so-called guarantee) as a ruse to obtain the goods and that it never intended to pay the full amount, indeed initially demanding a discount. (Ewig Aff. at ¶ 7).
Defendant argues that this is not a viable tort claim because it amounts in substance to a breach claim with the added allegation that the defendant entered into a contract without intending to perform. This issue was previously addressed in this case when we denied leave for plaintiff to amend its complaint to add similar fraud claims against the principals of the defendant. As we held there, such a fraud theory does not state a claim independent of the underlying contract claim, which is already in the case, and hence we dismiss this fraud claim as well. (See Aug. 11, 2011 Memorandum & Order at 13-24).
D. The Fee Claim
Defendant seeks summary judgment on plaintiff's last claim, for recovery of fees under the United Nations Convention on Contracts for the International Sale of Goods. The only stated basis for defendant's application is its assumption that the first claim, for contract breach, will be dismissed. As we have noted, that claim still survives, and hence this claim too will remain in the lawsuit.
E. Remaining Issues
In defendant's motion it seeks not only summary judgment dismissing plaintiff's claims, but also an order granting it affirmative relief requiring plaintiff to disgorge the payments previously made to it by Brooks on the disputed shipment. (See Def. Mem. 2, 22). The rationale for this demand appears to be the fact that plaintiff has obtained a judgment against the carrier in the China-based litigation.
In effect, defendant seeks relief on a counterclaim that it has never asserted here. That alone is a sufficient basis to deny the request.
We also note that there is no suggestion in the record that plaintiff has satisfied its judgment, which is apparently on appeal. (Schmid Aff. ¶ 5). --------
The last issue we face arises from what amounts to an implicit application by defendant that this case be dismissed in favor of the Chinese litigation. (See Def. Mem. 2). There is no dispute that a district court has discretion to dismiss or stay a lawsuit based on "the pendency of a related proceeding in a foreign jurisdiction." Mastercard Int'l Inc. v. Argencard Sociedad Anonima, 2002 WL 432379, at *8 (S.D.N.Y. Mar. 20, 2002) (citing cases); accord, e.g., Am. Stock Exchange, LLC v. Towergate Consultants Ltd., 2003 WL 21692814, at *2 (S.D.N.Y. July 21, 2003). Nonetheless, as in cases addressing domestic applications for abstention, the courts are reminded of "the[ir] virtually unflagging obligation . . . to exercise jurisdiction given to them." Mastercard Int'l, 2002 WL 432379, at *8 (quoting Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976)); accord, e.g., Dragon Capital Partners L.P. v. Merrill Lynch Capital Servs. Inc., 949 F. Supp. 1123, 1127 (S.D.N.Y. 1997). Among the pertinent considerations when the court addresses this type of application are "(i) the similarity of the parties and issues; (ii) the adequacy of the alternative forum; (iii) the convenience of the parties; (iv) the promotion of judicial efficiency; (v) the possibility of prejudice to either party; and (vi) the temporal sequence of the filings." Mastercard Int'l, 2002 WL 432379, at *2 (citing MLC (Bermuda) Ltd. v. Credit Suisse First Boston Corp., 46 F. Supp.2d 249, 251 (S.D.N.Y. 1999)).
In this case the China-based lawsuit was commenced before our litigation. Moreover, although the nominal plaintiff in that case was Quanzhou's shipping agent, we have determined that Quanzhou itself controls that litigation, which is being pursued for its benefit. (See Ewig Aff. ¶¶ 1, 9; Def. St. ¶ 30). Although the defendant in that case is not Brooks, but rather the carrier, we note that the case involves precisely the same events and the same loss as is claimed here.
We also have no reason to doubt that China is an adequate forum for litigation of Quanzhou's claims. See, e.g., Huang v. Advanced Battery Techs., Inc., 2010 WL 2143669, at *5-*6 (S.D.N.Y. May. 26, 2010) (finding China to be an adequate alternative forum for a dispute involving contract claims) (citing, inter alia, Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 435 (2007)). As for convenience, there is no doubt that litigation in China is convenient for Quanzhou since it is based there, and it has custody of all pertinent documents reflecting both the arrangement for the shipment and the delivery in the United States, as well as the shortfall in payment by Brooks for the shipment. The convenience of Brooks is irrelevant because it is not a party in China.
Judicial efficiency is clearly promoted by deferring to the Chinese courts. As reported, plaintiff has already obtained a judgment there for the full amount of the shipment, an amount that, if paid by the carrier, will indeed represent an overpayment of the total due on the shipment. (See Def. St. ¶ 30). Simultaneous pursuit of these parallel lawsuits on two different continents is obviously inefficient, a problem exacerbated by plaintiff's unexcused refusal to comply with a court directive that it provide a status report on the China litigation, and its refusal even to allow the use of the original bill of lading at a deposition in this case.
As for the order of filing, as noted, the China case was apparently filed first. Since, however, it appears that not much time passed between the two filings, we give less weight to this consideration, although we note, again, that the China suit is far more advanced, having reached the appellate stage. This too counsels in favor of deferring, at least for now.
The strongest argument by plaintiff for pursuing the current case here is plaintiff's speculation that the carrier might be judgment-proof. That is at least a theoretical concern and counsels against dismissal of this lawsuit.
That said, given the inefficiencies in pursuing the current case while the China lawsuit pends on appeal and the resistence by plaintiff to full disclosure (or indeed any disclosure) about the progress of that case, we conclude that the appropriate step is to stay further proceedings in this case -- that is, at present principally discovery -- until at least clarification of the status of the appeal and any further litigation in the China case. To that end, and in further assurance that the authority of this court is not flouted, we direct once again that plaintiff provide a detailed account of the current status and expected time frame for conclusion of proceedings in the China litigation, as well as the status of any efforts to satisfy the judgment, and that it do so by declaration of a person with personal knowledge within fourteen days. We further note that if plaintiff again violates this order, we are likely to contemplate dismissal of this case.
CONCLUSION
For the reasons stated, the parties' respective summary judgment motions are granted to the extent stated. Plaintiff is to provide the required status report by declaration within fourteen days. Dated: New York, New York
September 28, 2012
/s/_________
MICHAEL H. DOLINGER
UNITED STATES MAGISTRATE JUDGE Copies of the forgoing Memorandum and Order have been mailed today to: Casper F. Ewig, Esq.
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