Opinion
02-CV-0230E(F)
September 30, 2003
Karen Sanders, Esq., Cegelski Legal Associates, PLLC, Rochester, New York, For plaintiff
Timothy Lexvold, Esq., Monroe County Department of Law, Rochester, New York, For defendants
MEMORANDUM and ORDER
This decision may be cited in whole or in any part.
Enidine filed a complaint in state court, which was removed here March 25, 2002 by Dayton-Phoenix Group ("DPG"). DPG also filed a counterclaim on March 25, 2002. DPG filed a motion for summary judgment on August 11, 2003. Enidine cross-filed for partial summary judgment that same day. These motions were argued and submitted on September 19. For the reasons set forth below, DPG's motion will be denied and Enidine's motion will be granted in part and denied in part.
DPG's Counterclaim seeks damages allegedly resulting from deficient actuators provided by Enidine. Specifically, DPG alleges that Enidine's actuators failed to meet the requisite specifications and were not manufactured as directed by DPG. DPG alleges that it directed Enidine to stop all deliveries in August of 2001 and that Enidine was unable to resolve the problems with the actuators. Consequently, DPG developed an alternative design for its lifts. DPG sought Enidine's assistance in further modifying the lift design, but Enidine refused and demanded payment for its actuators. Consequently, DPG cancelled the remaining deliveries on November 21, 2001 and asked Enidine to take back its actuators — which Enidine refused to do.
Motion Science is an unincorporated division of Enidine. DPG contacted Motion Science in February of 2000 concerning the purchase of actuators for a wheelchair lift system that DPG was developing. During the ensuing months, DPG and Motion Science worked together to design an actuator that met DPG's specifications.
The names will thus be used interchangeably.
In a letter dated July 19, 2000, Motion Science informed DPG that (1) Motion Science needed a commitment from DPG in order to place the order and (2) that, if DPG cancelled an order, it would be charged a 10% cancellation fee "based on the remaining balance and the costs of unused components." Compl. ¶ 5. Enidine sent DPG several price quotations. Enidine faxed DPG a final quotation on September 7, 2000 ("the Final Quotation"), which contained various terms and conditions. On September 8, 2000 DPG issued a purchase order for actuators — identified as "custom linear positioners" — to be delivered over a two-year period. The purchase order (No. 311920) was sent by facsimile. On September 19, 2000, DPG provided Motion Science with a set of specifications for the manufacture of the actuators. Enidine began manufacturing customized actuators for DPG.
The fax was sent to Vertical Mobility, to the attention of Chuck Walker — DPG's purchasing agent. Vertical Mobility and DPG share common ownership; DPG was engaged in the manufacture of wheelchair lifts to be marketed by Vertical Mobility. Murphy Dep. at 4-5, 9, 11. DPG's own communications demonstrated the related nature of DPG and Vertical Mobility. For example, DP 000257 — a fax from DPG to Enidine transmitting moment-load specifications — reads as follows:
" Contact: Chuck Walker (Purchasing) Joe Zahora (Engineering)Company: Dayton-Phoenix Group (Vertical Mobility)"
Consequently, DPG's employees held themselves out as being related to Vertical Mobility, regardless of DPG's (Vertical Mobility's) corporate structure. See also Zahora Dep., at 16 (stating that DPG and Vertical Mobility were related and describing such relationship); France Dep., at 37.
On March 20, 2001 DPG reissued Purchase Order No. 311920, which superseded the September 8, 2000 purchase order. The purchase order was again sent by facsimile. The total price of the actuators was $704,634.00. DPG issued another purchase order (No. 314907) by facsimile on June 29, 2001 for $8,600 worth of actuators. Between October 31, 2000 and June 21, 2001, DPG received actuators from Enidine and paid invoices totaling $133,402.49. Between May 24, 2001 and July 26, 2001, however, DPG received actuators and refused to pay invoices totaling $42,817.25.
Enidine's Complaint asserts claims for (1) goods sold, delivered accepted, (2) breach of contract and (3) a cancellation fee of $79,632.00. DPG's Counterclaim asserts claims for (1) breach of implied and express warranties, (2) revocation of acceptance and (3) breach of contract.
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 is mandated "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 Adidces 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 [movant's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [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). 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 5.
DPG has filed a motion for summary judgment seeking to dismiss this action on the ground that Enidine has failed to create a genuine issue of material fact as to whether it has suffered damages. Enidine has proffered sufficient evidence to create a genuine issue of material fact as to whether damages exist. Indeed, Enidine is only required to show the existence of damages — and need not do so with mathematical certainty. Accordingly, DPG's motion for summary judgment will be denied.
See e.g., Def.'s Appendix to Local Rule 56.1 Statement of Material Facts, Ex. 6 at 7.
See Lexington Prods. Ltd. v. B.D. Communications, Inc., 677 F.2d 251, 253 (2d Cir. 1982) ("New York courts do not require scientific rigor in the calculation of damages.") (citing Randall-Smith, Inc., v. 43d St. Estates Corp., 17 N.Y.2d 99, 106 (1966)); McCoy Assocs., Inc. v. Nulux, Inc., 218 F. Supp.2d 286, 293-294 (E.D.N.Y. 2002) ("New York courts have long held that uncertainty in the amount of loss caused by a breach of contract, or even the complete absence of damages resulting from the breach, does not defeat a breach of contract claim.") (emphasis added). The cases submitted by Enidine at oral argument also support the proposition that the existence of damages must be proven, but that the amount of damages does not have to be certain.
This Court agrees with Enidine's characterization of DPG's motion as a discovery motion in disguise. Consequently, inasmuch as Enidine indicated that it is willing to make a FRCvP 30(b)(6) witness available on the issue of damages, it should do so soon.
Enidine filed a motion seeking partial summary judgment — to wit, findings that (1) Enidine's quotation (including terms on the reverse side) and DPG's purchase order (excluding the terms on the reverse side) comprise the governing contract, (2) DPG's first and third counterclaims should be dismissed and (3) DPG accepted certain actuators that Enidine delivered between May 24, 2001 and July 26, 2001.
Inasmuch as there is no genuine issue of material fact as to the first issue, Enidine's motion for summary judgment on such issue will be granted. Although "an offeree is the only person who can accept an offer while it is open, " Enidine's Final Quotation was addressed to Chuck Walker — DPG's purchasing agent. The fact that the Final Quotation was also addressed to Vertical Mobility — a company that shared common ownership with DPG and was held out as a related part of the DPG enterprise — does not alter the fact that an offer was made to DPG. To find that an offer was not made to DPG would elevate form over substance. Alternatively, even if an offer was made to Vertical Mobility as a separate entity, the Final Quotation would constitute an offer to both Vertical Mobility and DPG (via Chuck Walker). Either way, Walker clearly construed Enidine's Final Quotation as an offer inasmuch as he "constructed" his purchase order based on the numbers contained in the Final Quotation. N.Y. U.C.C. § 2-207.
Lin Broadcasting Corp. v. Metromedia, Inc., 74 N.Y.2d 54, 64 (1989).
Although Walker testified in his deposition that Enidine never issued any quotes to DPG, Exhibit 69 to the Affidavit of Joseph A. Zahora, a DPG engineer, is a letter from France to Walker (addressed to DPG) with a "re line" that reads " Quotation for lift actuators." Consequently, there is no question that the subsequent quotation dated September 7, 2000 was indeed an offer to DPG (via Chuck Walker).
DPG does not proffer any evidence indicating that Enidine sent the Final Quotation to DPG's purchasing agent for a purpose other than to make an offer of sale. Moreover, even assuming arguendo that DPG's September 8, 2000 purchase order was the operative offer, Enidine's acceptance was the shipment of goods accompanied by an invoice that contained the same terms and conditions contained in the Final Quotation. Consequently, DPG's failure to timely object to the terms and conditions contained in the invoice (i.e., the acceptance) resulted in a contract containing the terms and conditions set forth in Enidine's invoice dated October 31, 2000 (and numerous invoices thereafter). See N.Y. U.C.C. §§ 2-206, 2-207, 2-208. But see Rite Fabrics, Inc. v. Stafford-Higgins Co., 366 F. Supp. 1, 6-7 (S.D.N.Y. 1973) (holding that an invoice did not constitute an acceptance within the meaning of N.Y. UCC § 2-207).
See Walker Dep., at 41-43. Moreover, Walker understood when he issued DPG's purchase order dated September 8, 2000 that Enidine's Final Quotation was subject to its terms and conditions. Id. at 47.
Moreover, the terms of the Final Quotation were sufficiently detailed so as to constitute an offer for purposes of contract formation. N.Y. U.C.C. § 2-204(3). Consequently, Enidine's Final Quotation constituted an offer — which was accepted by DPG via its purchase order dated September 8, 2000 ("DPG's Acceptance").
See e.g., Rich Prods. Corp. v. Kemutec, Inc., 66 F. Supp.2d 937, 955-958 (E.D. Wis. 1999) (finding that price quotation was sufficiently detailed so as to constitute an offer — which thus made the responding purchase order an acceptance). As the court in Rich Prods. Corp. noted, factors relevant to a determination whether a price quote is an offer include (1) "the extent of prior inquiry" (Enidine and DPG/Vertical Mobility had been negotiating for at least seven months), (2) "the completeness of the terms of the suggested bargain" (the Final Quotation contained detailed prices, quantities, and mechanical drawings and specifications of the actuators) and (3) the number of persons to whom the price is quoted (the price was only quoted to DPG/Vertical Mobility and was based on customized specifications preliminarily provided by DPG/Vertical Mobility). Id. at 956-958 (citing Restatement (Second) of Contracts § 26, cmt. c (1979)); see also Nordyne, Inc. v. Int'l Controls Measurement, 262 F.3d 843, 846 (8th Cir. 2001) (discussing the factors set forth in the Restatement (Second) of Contracts). Moreover, the fact that engineering specifications required re-calibration between September 16-19, 2000 do not undermine contract formation, which had occurred September 8, 2000. Indeed, it is not surprising that novel customized machinery would require additional engineering during production.
The second page of the Final Quotation contained Enidine's Terms Conditions.
Furthermore, DPG's Acceptance consisted of nine pages sent by facsimile, which did not contain the terms and conditions contained on the reverse side of the original copy. This Court finds that the contract between the parties consisted of Enidine's Final Quotation (including its Terms Conditions) and DPG's Purchase Order dated September 8, 2000 (excluding the uncommunicated terms and conditions contained on the reverse side). Accordingly, Enidine's motion for summary judgment will be granted with respect to the first issue.
See Decl. of Sean France, Exs. B, C; Walker Dep., at 58-59, 114-115. Moreover, DPG never mailed the original to Enidine. Id. at 53.
With respect to the second issue, this Court finds that (1) DPG's first counterclaim will be dismissed only to the extent that it is not based upon the express warranty contained in Enidine's Terms Conditions and (2) DPG's third counterclaim will not be dismissed.
With respect to DPG's first counterclaim, Enidine's Terms Conditions excluded all express or implied warranties other than the express warranty that the actuators would "be free from defects in material and workmanship." France Decl., Ex. A, at 2, ¶ 9. Accordingly, DPG's first counterclaim (breach of warranty) will be dismissed to the extent that it asserts a warranty claim (for express or implied warranty) other than the express warranty contained in Enidine's Terms Conditions.
Enidine's exclusion and modification of warranties complied with the requirements of N.Y. U.C.C. § 2-316. Indeed, the exclusion/modification was labeled "WARRANTIES" on the second page of Enidine's offer.
Enidine also seeks to limit the remedy available to DPG because Enidine's Terms Conditions contains a limited remedy of replacement or refund. Nonetheless, this Court must determine whether such limited remedy fails in its essential purpose. This determination, however, is a question of fact for a jury to decide. Accordingly, DPG's first counterclaim will be dismissed only to the extent that it asserts a breach of warranty claim that is not based on the express warranty contained in Enidine's Terms Conditions and the validity of Enidine's limitation of remedy provision will be left for a jury to decide.
See Roneker v. Kenworth Truck Co., 944 F. Supp. 179, 183-185 (W.D.N.Y. 1996).
See Laidlaw Transp., Inc. v. Helena Chem., Co., 255 A.D.2d 869, 870 (4th Dep't 1998) ("[w]hether an exclusive or limited remedy provision fails of its essential purpose is an issue of fact for the jury."); Roneker, supra note 19, at 184.
With respect to DPG's third counterclaim (breach of contract), Enidine seeks dismissal on the ground that such seeks consequential and incidental damages. The relevant provision of Enidine's Terms Conditions provides that,
"In no event shall Seller be liable for claims (based upon breach of express warranty or negligence) for any other damages, whether direct, immediate, foreseeable, consequential, or special or for any expense incurred by reason of the use or misuse, sale or fabrication of products which do or do not conform to the terms and conditions of this contract." France Decl., Ex. A, at 2, ¶ 10 (emphasis added).
Inasmuch as DPG's third counterclaim is based on breach of contract, DPG's right to seek consequential damages is not altered by the contract. Accordingly, Enidine's motion for summary judgment will be denied with respect to DPG's third counterclaim.
To the extent that Enidine contends that such language is ambiguous — i.e., that it can also be interpreted to provide the exclusive remedy for a breach of contract claim — the Terms Conditions must be construed strictly against Enidine as the drafter of such. See Arnold v. New City Condominium Corp., 78 A.D.2d 882, 882 (2d Dep't 1980).
With respect to the third issue upon which Enidine seeks summary judgment, there is a genuine issue of material fact as to whether DPG accepted the actuators delivered on and after May 24, 2000. As noted above, Enidine's Terms Conditions are part of the parties' contract. The relevant provision of the contract provides that:
"Upon written notice only, not later than thirty (30) days after arrival of any product furnished hereunder ***, Seller will replace any such product that fails to conform to the conditions of this contract, or, at Seller's option, Seller will repay upon return of the non-conforming product, the price paid for such product ***." France Decl., Ex. A, at 2, ¶ 10.
This provision, however, does not establish the parameters of DPG's right to reject actuators. Rather, it simply establishes the time in which DPG must supply written notice in order to seek replacement of or a refund for goods that have been delivered. Indeed, under Enidine's interpretation, DPG would be prohibited from rejecting the goods at all because its sole recourse for nonconforming goods would be replacement or refund. Although parties may contractually modify the remedies available to the buyer upon the receipt of nonconforming goods — N.Y. U.C.C. § 2-601 —, ¶ 10 of Enidine's Terms Conditions does not modify DPG's right to reject nonconforming goods. Rather, ¶ 10 establishes an obligation of Enidine ( i.e., "Seller will replace ***"); it does not, however, establish DPG's sole remedy. Consequently, there is a genuine issue of material fact as to whether DPG timely rejected the actuators delivered on and after May 24, 2001. Accordingly, Enidine's motion for summary judgment with respect to this issue will be denied.
Cf. Cliffstar Corp. v. Elmar Indus., Inc., 254 A.D.2d 723, 724 (4th Dep't 1998) (noting that buyer's failure to reject goods or revoke acceptance did not impair other remedies for nonconformity). Moreover, inasmuch as this provision is ambiguous at best as to whether the thirty-day objection period applies to DPG's right to reject nonconforming goods, it must be construed against Enidine as the drafter in any event. See Arnold, supra note 21, at 882.
See N.Y. U.C.C. § 2-719(1)(b) ("resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy.") (emphasis added).
See Sherkate Sahami Khass Rapol v. Henry R. Jahn Son, 701 F.2d 1049, 1051 (2d Cir. 1983); Gen. Elec. Credit Corp. v. Xerox Corp., 490 N.Y.2d 407, 408 (4th Dep't 1998).
Accordingly, it is hereby ORDERED that defendant's motion for summary judgment is denied and that plaintiff's motion for summary judgment is granted in part and denied in part such that (1) the contract between the parties consists of Enidine's Final Quotation (including its terms and conditions) and DPG's Purchase Order dated September 8, 2000 (excluding the terms and conditions contained on the reverse side), (2) DPG's first counterclaim is dismissed except to the extent that it is based on a breach of the express warranty contained in Enidine's Terms Conditions, (3) DPG's third counterclaim survives summary judgment, (4) there is a genuine issue of material fact as to whether DPG timely rejected the actuators delivered on and after May 24, 2001 and (5) that the parties shall appear before Part III of this Court on November 7, 2003 at 3:00 p.m. (or as soon thereafter as they may be heard) to set a date for trial.
The Court strongly encourages the parties to explore settlement at this time.