Hang Hing Loong Trading Company Limited v. Inco Limited Liability Company

REPLY BRIEF to Opposition to Motion

D.N.J.March 27, 2017

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY HANG HING LOONG TRADING COMPANY LIMITED, a corporation of Hong Kong, Plaintiff, -against- INCO LIMITED LIABILITY COMPANY, a/k/a INCO L.L.C., a New Jersey limited liability company, Defendant. Case No.: CV 15-3614 (JMV))(JBC) Motion Day: April 3, 2017 PLAINTIFF'S BRIEF IN REPLY TO DEFENDANTS’ OPPOSITION TO PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT LAW OFFICES OF BING LI, LLC 980 Avenue of the Americas, Suite 405 New York, NY 10018-5443 (212) 967-7690 bli@blillc.com Attorneys for Plaintiff Hang Hing Loong Trading Company Limited Case 2:15-cv-03614-JMV-JBC Document 35 Filed 03/27/17 Page 1 of 13 PageID: 479 - ii - TABLE OF CONTENTS TABLE OF AUTHORITIES ............................................................................................. iii PRELIMINARY STATEMENT ........................................................................................ 1 ARGUMENT ..................................................................................................................... 1 Point I PLAINTIFF’S CLAIM IS NOT BARRED BY STATUTE OF LIMITATION OF THE NJ UCC. ......................................................................... 1 Point II DEFENDANT’S ORAL AGREEMENT IS UNENFORCEABLE AND BARRED BY THE PAROLE EVIDENCE RULE. .............................................. 3 A. Defendant’s oral agreement is unenforceable for lacking essential terms. ............................................................. 3 B. Defendant’s oral agreement is barred by the parol evidence rule. ........................................................................ 5 Point III THE DOCTRINE OF DUTY TO MITIGATE IS NOTE APPLICABLE AS THERE WAS NO NEW CONSEQUENTIAL DAMAGE FOR AVOIDANCE. ....................................................................................................... 7 Point IV PLAINTIFF IS ENTITLED TO JUDGMENT ON ITS CLAIM FOR ACCOUNT STATED AS DEFENDANT FAILS TO RAISE ANY GENUINE ISSUE OF MATERIAL FACT. .......................................................... 9 Point V PLAINTIFF IS ENTITLED TO AWARD OF PRE AND POST-JUDGMENT INTEREST. ......................................................................... 9 CONCLUSION .................................................................................................................. 10 Case 2:15-cv-03614-JMV-JBC Document 35 Filed 03/27/17 Page 2 of 13 PageID: 480 - iii - TABLE OF AUTHORITIES CASES Borough of West Caldwell v. Borough of Caldwell 26 N.J. 9, 24 (1958) .......................................................................................................... 5 Burlington County Country Club v. Midlantic Nat. Bank South 223 N.J.Super. 227 (Ch.Div. 1987) ................................................................................... 2 Denville Amusement Company v. Fogelson 84 N.J.Super. 164 (App.Div. 1964) 475 U.S. 574 (1986) .................................................. 2 Ingraham v. Trowbridge Builders 297 N.J.Super. 72 (App. Div. 1997) .................................................................................. 8 Jiminez v. All Am. Rathskeller 503 F.3d 247 (3d Cir.2007) ................................................................................................ 7 Malaker Corp. Stockholders Protective Committee v. First Jersey Nat. Bank 163 N.J.Super. 463 (App.Div. 1978), certif. denied, 79 N.J. 488, 401 A.2d 243 (1979) ... 5 Shelcusky v. Garjulio 172 N.J. 185 A.2d 138, 144 (2002) .................................................................................... 7 State v. Ernst & Young, LLP 386 N.J. Super. 600 (App.Div. 2006) ................................................................................ 9 Toyota Industrial Trucks U.S.A, Inc. v. Citizens Nat'l Bank of Evans City, et al. 611 F.2d 465 (3d Cir.1979) ............................................................................................... 8 McDonald v. Mianecki 79 N.J. 275 (1976) .............................................................................................................. 9 McGraw v. Johnson 43 N.J.Super. 267 (App.Div. 1956) .................................................................................... 9 Weichert Realtors v. Ryan 128 N.J. 427 (1992) ............................................................................................................ 5 W.R. Huff Asset Mgmt. Co., L.L.C. 2009 WL 2436692, at *7 .................................................................................................. 10 Case 2:15-cv-03614-JMV-JBC Document 35 Filed 03/27/17 Page 3 of 13 PageID: 481 PRELIMINARY STATEMENT Plaintiff, Hang Hing Loong Trading Company Limited (“Plaintiff” or “HHL”), by and through its undersigned attorneys, respectfully submits this Brief in reply to the opposition to plaintiff’s motion for summary judgment by defendant INCO Limited Liability Company, a/k/a INCO L.L.C. (“Defendant” or “Inco”). A Response to Defendant’s Rule 56.1 Supplemental Statement dated March 27, 2017 is also being submitted contemporaneously herewith. For the reasons stated in plaintiff’s opening papers and herein, the Court should grant plaintiff’s motion. ARGUMENT POINT I PLAINTIFF’S CLAIM IS NOT BARRED BY STATUTE OF LIMITATION OF THE NJ UCC. Defendant’s argument that plaintiff’s claim is barred by the four-year statute of limitations under Article 2 of the New Jersey Uniform Commercial Code, N.J.S.A.12A:2- 725(1) is entirely baseless. (Def. Br.1, at 4-8) The contract upon which plaintiff relies for its substantive relief is not a contract for the sales of goods, but the 5/4/2011 Agreement for the return of money paid to defendant albeit for the copper cathodes that defendant admittedly was unable to deliver pursuant to an underlying contract for the sales of goods. The 5/4/2011 Agreement is a written instrument which memorializes defendant’s acknowledgement of an existing debt and unequivocal promise to pay -- the December 2009 prepayment of $3,656,049.14 -- and therefore 1 “Def. Br.” refers to Defendant’s Brief in Opposition to Plaintiff’s Motion for Summary Judgment dated and filed on March 13, 2017 (Doc. No. 34). Case 2:15-cv-03614-JMV-JBC Document 35 Filed 03/27/17 Page 4 of 13 PageID: 482 - 2 - constitutes a new contract enforceable on its own terms under N.J.S.A. 2A:14-242. The statute provides that in respect to a contract action, “no acknowledgement or promise by words only” shall suffice to take any case out of the statute of limitations, and that a writing signed by the party to be charged is required therefor. See Denville Amusement Company v. Fogelson, 84 N.J.Super. 164 (App.Div. 1964) (holding that letters of transmittal which the decedent signed as the treasurer of the corporation and sent with financial reports which he had prepared as the corporation’s accountant and which showed his debt to the corporation was not an acknowledgment or new promise lifting the bar of limitation with respect to his personal indebtedness to the corporation). Here, the 5/4/2011 Agreement is in writing and was signed by Inco (by Chou), who acknowledges the existing debt, unequivocally promises to pay the existing debt, and actually recite the antecedent three payments prior to the making of the agreement (Pl. St., ¶ 44). As such, the 5/4/2011 Agreement sufficiently satisfies the statutory requirements for a new acknowledgement and promise under N.J.S.A. 2A:14-24 and therefore constitutes a new contract, governed by the six-year statute of limitations under N.J.S.A. § 2A:14-1. In any event, even assuming, arguendo, plaintiff’s substantive relief being sought is governed by the underlying contract for the sales of goods, defendant has made various partial payments before and after the expiration of the UCC four-year statute of limitations, thereby reviving the statute of limitations for the statutory period from the time of the payment. See Burlington County Country Club v. Midlantic Nat. Bank South, 223 N.J.Super. 227, 236 2 The text of N.J.S.A. 2A:14-24 reads as follows: In actions at law grounded on any simple contract, no acknowledgement or promise by words only shall be deemed sufficient evidence of a new or continuing contract, so as to take any case out of the operation of this chapter, or to deprive any person of the benefit thereof, unless such acknowledgement or promise shall be made or continued by or in some writing to be signed by the party chargeable thereby. Case 2:15-cv-03614-JMV-JBC Document 35 Filed 03/27/17 Page 5 of 13 PageID: 483 - 3 - (Ch.Div. 1987) (“Payment of or on account of a debt or obligation may also toll or revive the statute of limitations, thereby extending it for the statutory period from the time of such payment.”) (citations omitted) (holding that the 16-year statute of limitations for cancelling mortgage and underlying indebtedness was tolled by partial payments). Here, defendant made the following payments within the UCC 4-year statute of limitation: 2/22/2011, $50,000.00; 3/31/2011, $50,000.00 ; 4/21/2011, $50,000.00, and 11/7/2011, $1,000,000.00. (Pl. St., ¶ 44) The last partial payment dated November 7, 2011 would have extended the four-year statute of limitation to November 2015 and plaintiff’s complaint was filed well within this extended statute of limitation in May 2015. POINT II DEFENDANT’S ORAL AGREEMENT IS UNENFORCEABLE AND BARRED BY THE PAROLE EVIDENCE RULE. A. Defendant’s oral agreement is unenforceable for lacking essential terms. Defendant admits, in no uncertain terms, that “the Plan [the 5/4/2011 Agreement] reflects a memorialization of Inco’s projected repayment or refund of Plaintiff’s December 2009 Payment for the goods it did not receive from Inco.” (Def. Br., at 9) Defendant contends that the parties orally agreed to a “strategy” (Def. Suppl. St.3, ¶ 32) in September 2012 that “Mrs. Li said that she thought the [Standard Bank] account was doing well and Chou should just continue to invest the funds in the hedging account” (id., ¶ 30). Defendant’s bare allegations are, for purposes of this motion, simply that the parties agreed to a “strategy” but do not spell out an “agreement” to modify the payment terms of the 5/4/2011 Agreement. Therefore, the Court should find that Chou’s allegations are insufficient 3 “Def. Suppl. St.” refers to Inco’s Supplemental Statement of Material Facts not in Dispute Pursuant to Local Rule 56.1 dated and filed March 13, 2017 (Doc. 34-5). Case 2:15-cv-03614-JMV-JBC Document 35 Filed 03/27/17 Page 6 of 13 PageID: 484 - 4 - as a matter of law for the existence of an “oral agreement” to modify the payment terms of the 5/4/2011 Agreement. By September 2012, Inco owed plaintiff about $2.5 million (Pl. St., ¶ 44) but Chou told Mr. Li there was only $1.24 million in the Standard Bank account4 (Li Decl., Ex. E, Chou Dep. Tr. 112). No assertion is made at Chou’s deposition or in his declaration submitted in opposition to plaintiff’s motion as to (i) how the payment term under the 5/4/2011 Agreement was modified, (ii) what the new payment term was, (iii) what if the investment account yielded more than Inco owed plaintiff; (iv) whether plaintiff would receive more than it was owed by Inco if the account yielded more than Inco owed plaintiff; (v) how long the parties agreed to maintain the investment account; (vi) what if the investment account failed to yield sufficient funds to pay the $2.5 million owed at the time; or (vi) whether plaintiff agreed to relinquish its right under the 5/4/2011 Agreement if the account would not generate sufficient funds to pay the amount owed by defendant to plaintiff. Considering everything Chou has asserted about the alleged “oral agreement” to a “strategy,” there are material terms of a contract that are missing, which would be insufficient, as a matter of law, for the Court to find the existence of an oral agreement to alter the 5/4/2011 Agreement.5 “An agreement so deficient in the specification of its essential terms that the performance by each party cannot be ascertained with reasonable certainty is not a contract, 4 Chou’s self-serving statement that “Mrs. Li said that she thought the account was doing well” is inconsistent with Chou’s deposition testimony that he told Mr. Li at this September 2012 meeting that there was 1.24 million in the account and that “[n]othing has been generated, things [sic. = since] last year November.” (Li Decl., Ex. E, Chou Dep. Tr., 112:17-18) 5 In fact, when plaintiff in November 2014 refused to sign the Accord and Satisfaction because it did not agree to release Inco for the balance of the account after the turnover of the account value of about $700,000 (Ye Decl., ¶ 39), Chou transferred $650,000 from this Standard Bank account to Inco in May 2015 (Li Decl., Ex. E, Chou Dep. Tr. 197), withdrew the last balance of $120,000 and closed the account in December 2015, leaving nothing for plaintiff (id., 202). Case 2:15-cv-03614-JMV-JBC Document 35 Filed 03/27/17 Page 7 of 13 PageID: 485 - 5 - and clearly is not an enforceable one.” Malaker Corp. Stockholders Protective Committee v. First Jersey Nat. Bank, 163 N.J.Super. 463, 474 (App.Div. 1978), certif. denied, 79 N.J. 488, 401 A.2d 243 (1979) (citations omitted). “A contract so vague in the description of the performance of each party thereto is incapable of remedy at law or in equity.” Id. “An essential characteristic of an enforceable contract is that its obligations be specifically described in order to enable a court or a trier of fact to ascertain what it was the promissor undertook to do.” Id. (citation omitted). In Malaker Corp., the Appellate Division affirmed the trial court and found that an alleged loan agreement was lacking essential terms of interest rates and terms of repayment of loans and therefore was not enforceable. See also Borough of West Caldwell v. Borough of Caldwell, 26 N.J. 9, 24-25 (1958) (the terms were so vague that the intent of the parties could not be determined); Weichert Realtors v. Ryan, 128 N.J. 427, 435 (1992) (the contract lacked essential terms so that the obligation of each party could not realistically be ascertained). Also significantly, despite defendant’s contention that an oral agreement was made “to jointly invest Inco’s funds in the commodities market” (Def. Br., at 10), there is a total absence of any evidence as to the parties’ subsequent performance or execution of the alleged oral agreement. Nor is defendant able to point to any in the motion record. See Celotex, 477 U.S. at 325 (stating that “with respect to an issue on which the nonmoving party bears the burden of proof ... the burden on the moving party may be discharged by ‘showing’-- that is, pointing out to the district court -- that there is an absence of evidence to support the nonmoving party's case”). B. Defendant’s oral agreement is barred by the parol evidence rule. Even the Court is to determine that Chou’s naked allegations spell out all necessary Case 2:15-cv-03614-JMV-JBC Document 35 Filed 03/27/17 Page 8 of 13 PageID: 486 - 6 - essential terms of an oral agreement modifying the payment terms of the 5/4/2011 Agreement, the Court is respectfully requested to note that such an alleged “oral agreement” to jointly invest Inco’s funds in the commodities market” (Def. Br., at 10) was made prior to the 5/4/2011 Agreement, which is squarely barred by the parol evidence rule. Attempting to avoid the bar of the parol evidence rule, defendant spins around for a subsequent oral agreement to “supersed[e] the Plan’s repayment terms[.]” (Def. Br. at 10) However, Chou’s deposition admission has locked Inco on an alleged “oral agreement to jointly invest Inco’s funds in the commodities market” as an antecedent oral agreement to the 5/4/2011 Agreement. Chou testified at his deposition, unequivocally, as follows (Li Decl., Ex. E, Chou Dep. Tr. 116-17): Q. Now, I don't quite understand. What did this [September 2012] conversation have anything to do with Inco's obligation to pay the remaining 2.5-plus [million]? A. As I understand, at that point or even before that, before this November 2011 document been generated, we already became together to invest in that account. I would call it partner. Q. Before May 2011, you and Mr. Li had already agreed. Agreed what? A. Agreed to make our loss back from the hedging account. Q. Instead of returning Mr. Li the $3.6 million? A. I couldn't. What do you mean "instead"? I don't understand "instead." We don't have a money. Q. But you had 3.4 end of 2011? A. I said -- what I said, at year '11, May '11, before we even entered that first projected payment plan, even before that date, we had verbally bonded together to make the money back from Standard Bank. Chou’s admission is conclusive that before the making of the 5/4/2011 Agreement the parties had “agreed to make our loss back from the hedging account” and “we had verbally Case 2:15-cv-03614-JMV-JBC Document 35 Filed 03/27/17 Page 9 of 13 PageID: 487 - 7 - bounded together to make the money back from Standard Bank.” The asserted “oral agreement” to a “strategy” as to how to manipulate the funds in the Standard Bank account cannot be equated to an “oral agreement to jointly invest Inco’s funds in the commodities market,” which was allegedly made prior to the 5/4/2011 Agreement. The best the 9/2012 “strategy” agreement would mean can only be that -- a strategy agreement in the context of the preexisting “oral agreement to jointly invest Inco’s funds in the commodities market.” To the extent Chou is now alleging such an agreement was made in September 2012 that is inconsistent with his deposition testimony, the inconsistency is barred by the “sham affidavit” doctrine. The Third Circuit defines a “sham affidavit” as “a contradictory affidavit that indicates only that the affiant cannot maintain a consistent story or is willing to offer a statement solely for the purpose of defeating summary judgment.” Jiminez v. All Am. Rathskeller, 503 F.3d 247, 253 (3d Cir.2007). If a sham affidavit is offered in an attempt to defeat summary judgment, the trial judge may conclude that “no reasonable jury could accord the affidavit evidentiary weight.” Id. “Affidavits, which are usually drafted by counsel, are viewed as less credible than deposition testimony.” Id. See also Shelcusky v. Garjulio, 172 N.J. 185, 797 A.2d 138, 144 (2002) (stating that the “sham affidavit” doctrine refers to the trial courts’ “practice of disregarding an offsetting affidavit that is submitted in opposition to a motion for summary judgment when the affidavit contradicts the affiant's prior deposition testimony”). POINT III THE DOCTRINE OF DUTY TO MITIGATE IS NOT APPLICABLE AS THERE WAS NO NEW CONSEQUENTIAL DAMAGE FOR AVOIDANCE. Defendant argues that plaintiff fails to mitigate damages following Inco’s breach of Case 2:15-cv-03614-JMV-JBC Document 35 Filed 03/27/17 Page 10 of 13 PageID: 488 - 8 - the 5/4/2011 Agreement and, therefore, the Court should deny plaintiff’s summary judgment motion because issues of material facts exist regarding such failure to mitigate. The argument is, again, baseless. “The term ‘duty of mitigate’ damages has been interpreted to mean that ‘damages which the plaintiff might have avoided with reasonable effort without undue risk, expense, or humiliation are either not caused by the defendant’s wrong or need not have been, and therefore, are not to be charged against him.’” Toyota Industrial Trucks U.S.A, Inc. v. Citizens Nat'l Bank of Evans City, et al., 611 F.2d 465, 471 (3d Cir.1979) (quoting 11 Willston on Contracts, s 1353 at 274 (3d ed. 1968)). “The duty to mitigate damages is not applicable where the party whose duty it is primarily to perform the contract has equal opportunity for performance and equal knowledge of the consequence of the performance.” Ingraham v. Trowbridge Builders, 297 N.J.Super. 72 , 84 (App. Div. 1997) (citations omitted). There was no new damage as a result of defendant’s breach of the 5/4/2011 but the principal amount of refund owed by defendant to plaintiff. Therefore, the doctrine of duty to mitigate is not applicable to the contract at bar. Where Inco’s obligations and plaintiff’s rights are fully set forth in the 5/4/2011 Agreement, plaintiff has the right not to take less than what Inco owed in exercise plaintiff’s substantive right under the contract. This is actually what plaintiff did -- agreeing to take the money in the account, but refusing to sign a release. (Li Decl., Ex. E, Chou Dep. Tr., 171) The contract in question is akin to a borrower-lender contract in which there is no act or failure to act of the borrower that would have made the loan amount less than it is owed. Those cases cited and relied on by defendant for the duty to mitigate proposition is Case 2:15-cv-03614-JMV-JBC Document 35 Filed 03/27/17 Page 11 of 13 PageID: 489 - 9 - inapposite to the case at bar. In State v. Ernst & Young, LLP, 386 N.J. Super. 600 (App.Div. 2006), the Appellate Division affirmed the lower court’s decision not to award the state a cost difference of $564,520 paid by the state to a bypassed substitute bidder following the breach by the first successful bidder because the state failed to explain why it did not consider another bypassed bidder who was the lowest cost bidder. Ingraham, supra., involves a new home builder contract; McGraw v. Johnson, 43 N.J.Super. 267 (App.Div. 1956), a home construction contract; and McDonald v. Mianecki, 79 N.J. 275 (1976) a purchase contract of a new house. POINT IV PLAINTIFF IS ENTITLED TO JUDGMENT ON ITS CLAIM FOR ACCOUNT STATED AS DEFENDANT FAILS TO RAISE ANY GENUINE ISSUE OF MATERIAL FACT. In response to plaintiff’s motion to summary judgment, defendant admits to the essential and material facts that support plaintiff’s entitlement to judgment for account stated. Defendant admits to the total amount it received as plaintiff’s prepayment for the undelivered December 2009 shipment (Pl. St., ¶ 15); defendant admits to the total payment it made to plaintiff (Pl. St., ¶ 44); and defendant acknowledged and assented to the book account in the 5/4/2011 Agreement which was again confirmed in the proposed Accord and Satisfaction in November 2014 (Pl. St., ¶¶ 37-39). POINT V PLAINTIFF IS ENTITLED TO AWARD OF PRE- AND POST-JUDGMENT INTEREST. Defendant argues that plaintiff is not entitled to the additional 2% interest rate found in Rule 4:42-11(a)(iii) because “Plaintiff has not shown that there are usual circumstances in Case 2:15-cv-03614-JMV-JBC Document 35 Filed 03/27/17 Page 12 of 13 PageID: 490 - 10 - this matter permitting the enhanced rate.” (Def. Br. at 21) Defendant further contends that plaintiff does not provide any legal support for the proposition that “the length of the litigation permits the enhanced fee.” (Id.) Defendant is wrong. In its opening brief, plaintiff submits to the Court that sufficient legal authority to support the Court’s discretionary award of the enhanced interest rate. Plaintiff relies on the decision of Judge Hayden of this district court, W.R. Huff Asset Mgmt. Co., L.L.C., 2009 WL 2436692, at *7, where the Court awarded the enhanced interest rate by considering court decisions where the factors of “the amount of judgment at issue,” “the length of this litigation,” and “the reasonable rates of return that [the nonbreaching party] might have earned” were considered. (Pl. Br. at 17) CONCLUSION Accordingly, plaintiff respectfully requests that the Court grant plaintiff's motion for summary judgment and award plaintiff such other and further relief as the Court deems just and proper. Respectfully submitted, Dated: March 27, 2017 LAW OFFICES OF BING LI, LLC Attorneys for Plaintiff By: /s/ Bing Li Bing Li Case 2:15-cv-03614-JMV-JBC Document 35 Filed 03/27/17 Page 13 of 13 PageID: 491