Opinion
Index No. 652628/2020 Motion Seq. No. 001
05-11-2022
QUANZHOU HUIXIN BAGS CO., LTD., Plaintiff, v. FASHION ACCESSORY BAZAAR LLC, STEVEN RUSSO Defendants.
Unpublished Opinion
Motion Date 01/21/2021
PRESENT: HON. DAKOTA P. RAMSEUR Justice
DECISION + ORDER ON MOTION
HON. DAKOTA P. RAMSEUR, JUSTICE
The following e-filed documents, listed by NYSCEF document number (Motion 001) 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 33, 34, 35, 36 were read on this motion to/for DISMISS
Plaintiff, Quanzhou Huixin Bags Co., Ltd. (plaintiff), commenced this action for breach of contract, unjust enrichment, promissory estoppel, account stated, and conversion, stemming from defendants, Fashion Accessory Bazaar LLC (FAB) and Steven Russo (Russo) (collectively, defendants), alleged unpaid invoices. Defendants now move pre-answer pursuant to CPLR 3211(a)(1) and (7) to dismiss plaintiffs claims for promissory estoppel, conversion, and account stated. Plaintiff opposes the motion, and cross-moves pursuant to CPLR 3025 for leave to amend the complaint to add certain factual allegations. The motion and cross-motion are opposed. For the following reasons, both defendants' motion and plaintiffs cross-motion are granted in part.
According to the amended complaint, plaintiff entered into purchase agreements wherein plaintiff would supply, and defendants would purchase, certain goods from plaintiff, as set forth in the purchase agreements. Plaintiff alleges that plaintiff first began taking purchase orders from defendants through non-party Pacific Sourcing Group (PSG) in 2007. The amended complaint further alleges that defendants would send orders to PSG, and plaintiff would fulfil the confirmed orders from PSG. Specifically, plaintiff would manufacture the goods, defendants would inspect the goods and note any defects in the samples to PSG. Defendants would then accept or reject the shipment. Sometimes defendants would take sixty to ninety days from the time the goods were shipped to pay plaintiff as opposed to the agreed upon forty-five-day period.
According to plaintiff, between 2017 and 2018, defendants placed separate purchase orders for goods totaling $2,756,654.15 (collectively, the agreement). Plaintiff fulfilled each of the purchase orders at various times from March 12, 2018 through June 28, 2018. During the same time, plaintiff sent defendants invoices requesting payment for the fulfilled purchase orders. Plaintiff claims that defendants failed to pay the purchase order invoices despite accepting the goods and without making an objection. Plaintiff alleges that defendants represented they would pay plaintiff in full after FAB accepted the goods. Plaintiff also alleges that it would not have shipped the goods to defendants but for defendants' representation that defendants were financially capable to pay for the goods and that defendants would pay the full amount of plaintiff s invoices within a reasonable time of inspection.
DISCUSSION
At the outset, the court the court applies the allegations contained in the proposed amended complaint to the instant motion to dismiss (Ferguson v Sherman Square Realty Corp., 30 A.D.3d 288 [1st Dept 2006]; Sage Realty Corp. v Proskauer Rose LLP, 251 A.D.2d 35 [1st Dept 1998]).
On a motion to dismiss pursuant to CPLR 3211 (a)(7), the court must "accept the facts as alleged in the complaint as true, accord plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (Leon v Martinez, 84 N.Y.2d 83, 87-88 [1994]; see also Chapman. Spira & Carson. LLC v Helix BioPhanna Corp., 115 A.D.3d 526, 527 [1st Dept 2014]). However, "factual allegations . . . that consist of bare legal conclusions, or that are inherently incredible ... are not entitled to such consideration" (Mamoon v Dot Mel Inc., 135 A.D.3d 656, 658 [1st Dept 2016] [internal quotation marks and citations omitted]). "Whether the plaintiff will ultimately be successful in establishing those allegations is not part of the calculus" (London v Kroil Lob. Specialists, Inc., 22 N.Y.3d 1, 6 [2013] [internal quotation marks and citation omitted]).
Promissory estoppel
In support of the branch of their motion to dismiss plaintiffs promissory estoppel claim against Russo. defendants argue that the amended complaint fails to allege that Russo agreed to be liable for FAB:s debt. Further, defendants contend that plaintiff fails to allege that the agreement for Russo to pay was not reduced to writing, as required by the statute of frauds.
Initially, as plaintiff alleges that Russo promised to pay "[p]laintiff for the [g]oods in full" after FAB inspected the goods, such promise is governed by the state of frauds, and thus must be in writing (see General Obligations Law § 5-701 [a][2]). Plaintiff does not dispute that Russo's alleged promise to pay for the goods was not reduced to writing.
"If a contract is barred by the statute of frauds, a promissory estoppel claim is viable in the limited set of circumstances where unconscionable injury results from the reliance placed on the alleged promise” (Castellotti v Free, 138 A.D.3d 198, 204 [1st Dept 2016]; Matter of Estate of Hennel, 29 N.Y.3d 487, 404-495 [2017] ["promissory estoppel may preclude enforcement of the statute of frauds if application of the statute would result in unconscionability"]). To state a claim for promissory estoppel, a plaintiff must allege: (1) a promise that is sufficiently clear and unambiguous; (2) reasonable reliance on the promise by a party; and (3) injury caused by the reliance (MailinPalierson ATA Holdings LLC v Fed. Express Corp., 87 A.D.3d 836, 841-842 [1st Dept 2011]).
Here, plaintiffs claim for promissory estoppel fails to allege the "[i]nfliction of unconscionable injury on plaintiff as a result of any reliance he placed on defendant's alleged promises" (Melwani v Jain, 281 A.D.2d 276, 277 [1st Dept 2001]). Notably, plaintiffs amended complaint only alleges damages related to money that should have been paid pursuant to the agreement for the sale of goods. Plaintiffs claim that Russo requested-at least three years before plaintiff delivered the subject goods to defendants-that plaintiff devote a major part of their "[r]esources to the orders which underlie this [] claim and place a sign confirming the dedication of the Quanzhou factory toward production of FAB Starpoint goods" (amended compl at ¶ 62), is insufficient to constitute unconscionable injury (see Castellotti, 138 A.D.3d at 205; Foster v Kovner, 44 A.D.3d 23; 29 [1st Dept 2007]; Fleet Bank v Pine Knoll Corp., 290 A.D.2d 792, 794 [3d Dept 2002]).
In opposition, plaintiff argues in a conclusory fashion that the Convention on the International Sale of Goods (CISG) governs the agreement, including Russo's promise to pay for the goods. "In the absence of an agreement to the contrary, the CISG governs contracts for the sale of goods between parties in different countries that are signatories to the convention" (Microgem Corp., Inc. v Homecast Co., Ltd., US Dist Ct, S.D. NY, 10 CIV 3330 at *7, Sullivan, J, 2012). Where parties wish to exercise their right to derogate from the CISG, they must do so expressly (Rienzi & Sons, Inc. v Puglisi, 638 F Appx 87, 89 [2d Cir 2016]; Hanwha Corp. v Cedar Petrochemicals, Inc., 760 F.Supp.2d 426, 430 [SD NY 2011]). The parties do not dispute that the United States and China are signatories to the CISG and that the parties' agreement for the sale of goods does not exclude the CISG.
As defendants correctly argue, the CISG does not preempt claims for promissory estoppel (Caterpillar, Inc. v Usinor Industeel, 393 F.Supp.2d 659, 675 [ND IL 2005]; Geneva Pharms. Tech. Corp. v Barr Labys, Inc., 201 F.Supp. 2d 236, 287 [SD NY 2002], aff'd in part, revd in part and remanded, 386 F.3d 485 [2d Cir 2004]). Plaintiff does not cite to any caselaw demonstrating the application of the CISG to a claim sounding in promissory estopped. Nor does plaintiff assert a claim for breach of contract against Russo. Accordingly, the CISG is inapplicable to plaintiffs claim sounding in promissory estoppel against Russo.
Defendants further argue that plaintiffs claim of promissory estoppel against FAB should be dismissed as duplicative of plaintiff s claim for breach of contract. A promissory estoppel claim will be dismissed as duplicative of a breach of contract claim "[u]nless a legal duty independent of the contract-i.e., one arising out of circumstances extraneous to, and not constituting elements of, the contract itself-has been violated" (Brown v Brown, 12 A.D.3d 176, 176 [1st Dept 2004]). Plaintiff does not dispute that the allegations for both claims are identical, and arise from the agreement to purchase goods itself, and thus, plaintiffs claim for promissory estoppel is also dismissed as against FAB.
Account stated
"An account stated is an agreement between parties to an account based upon prior transactions between them with respect to the correctness of the account items and balance due" (Ryan Graphics, Inc. v Bailin, 39 A.D.3d 249, 250-251 [1st Dept 2007]). Further, "[a]n account stated assumes the existence of some indebtedness between the parties, or an agreement to treat the statement as an account stated. It cannot be used to create liability where none otherwise exists" (id. at 251). Here, the amended complaint adequately states a claim for account stated. To wit, plaintiff alleges that Russo agreed to pay for the goods, that payments for prior goods were made from a joint account held by FAB and Russo, that plaintiff sent FAB and Russo invoices for the subject goods, that neither FAB nor Russo disputed the invoices, and that the invoices remain unpaid.
Conversion
In support of the branch of defendants7 motion to dismiss plaintiffs claim for conversion, defendants contend that plaintiff does not have a possessory interest in the goods at issue. Specifically, defendants contend that title to those goods transferred to defendants when defendants accepted the goods. In opposition, defendants argue that the CISG, as opposed to the Uniform Commercial Code (UCC), governs plaintiffs conversion claim.
Initially, the court finds that state law is not supplanted by the CISG. Courts have uniformly held that the CISG does not apply to contract related tort claims (Geneva Pharms, Tech. Corp., 201 F.Supp.2d at 286; Viva Vino Imp. Corp. v Farnese Vini S.r.l, US Dist Ct, ED PA, CIV A99-6384, at *1, Aug. 29, 2000, Dubois, J.]; Urica, Inc. v Pharmaplast S.A.E., US Dist Ct, CD Cal, CIV 11-02476, at *20, Aug. 8, 2014], Morrow, J., aff'd sub nom. Urica, Inc. v Medline Indus.. Inc., 669 F Appx 421 [9th Cir 2016]), including claims sounding in conversion (E. Concrete Materials. Inc. v Jamer Materials Ltd., US Dist Ct, DNJ, CV 199032, Oct. 25, 2019, Wettre, J., report and recommendation adopted, U.S. Dist Ct, DNJ, No. 19-9032, Dec. 10, 2019, Wigenton, J.). Plaintiff fails to present any authority demonstrating that CISG governs its conversion claim. Accordingly, the court must analyze plaintiffs conversion claim under state law.
To establish a claim for conversion, "[a] plaintiff must show legal ownership or an immediate superior right of possession to specifically identifiable property, and must demonstrate that the defendant exercised unauthorized dominion over that property to the exclusion of the plaintiffs rights" (NY Medscan, LLC v JC-Duggan Inc., 40 A.D.3d 536, 537 [1st Dept 2007]). "Under New York law, when a valid agreement governs the subject matter of a dispute between parties, claims arising from that dispute are contractual; attempts to repackage them as sounding in ..., conversion . . . are generally precluded, unless based on a duty independent of the contract" (Poplar Lane Farm LLC v Fathers of Our Lady of Mercy, 449 F Appx 57, 59 [2d Cir 2011]).
Here, plaintiffs claims sounding in conversion allegedly arise from the same subject matter as in the alleged agreement. The amended complaint alleges that "[t]he promise to pay by Russo which was an essential part of the agreement for the production, shipment and purchase" of the goods and that defendants delivered the goods on the "[p]romise of the [defendants to pay and it is the breach of this essential promise underlying the contract, which is the gravamen of the instant conversion claim" (amended compl at ¶ 94). As plaintiff "alleges no independent facts sufficient to give rise to tort liability," aside from '"refusing to pay [for the goods, ]" plaintiffs claim sounding in conversion is dismissed (Kopel v Bandwidth Tech. Corp., 56 A.D.3d 320, 320 [1st Dept 2008] [holding that a claim for conversion cannot be predicated on a mere breach of contract]; Brown v Kristal Auto Mall Corp., 149 A.D.3d 1025, 1025 [2d Dept 2017] [same]).
Accordingly, it is hereby
ORDERED that defendants' motion to dismiss pursuant to CPLR 3211 (a)(7) is granted to the extent that plaintiffs claims sounding in promissory estoppel and conversion are dismissed; and it is further
ORDERED that plaintiffs cross-motion pursuant to CPLR 3025 for leave to file the amended complaint is granted to the extent that plaintiff is permitted to .amend the complaint as it relates to plaintiff's claim sounding in account stated, in the form annexed to plaintiffs moving papers; and it is further
ORDERED that the parties shall appear for a virtual preliminary conference on June 28, · 2022 .at 10:00 a.m.; and it is further
ORDERED that defendants shall serve a copy of this decision and order upon plaintiff, with notice of entry, within ten (10) days of entry.
This constitutes the decision and order· of the Court.