Opinion
102733/06.
March 20, 2009.
DECISION/ORDER
This is an action for breach of contract.
Plaintiffs Jill Ralston and Massimo Barra d/b/a Tabularis Fit, are engaged in the business of securing and supplying mannequin forms to customers in the retail clothing business. Defendant Life Style Forms and Display Co., Inc. is engaged in the business of manufacturing those forms.
Plaintiffs claim to have entered into two purchase order agreements dated April 11, 2005 and April 21, 2005 with defendant for the purchase and sale of mannequin forms. The latter purchase order specifically provided that "[a]ll deliveries to be received by Fabulous Fit® no later than July 15th." Plaintiffs allege that defendant failed and refused to manufacture the mannequin forms in compliance with the specifications set forth in the purchase orders, and further allege that the samples delivered were not suitable for the purposes intended. Plaintiffs claim to have repudiated the contract once it became apparent that defendant would not be able to deliver suitable goods by July 15, 2005. Plaintiffs claim to have sustained at least $566,922.00 in damages as a result of defendant's purported breach, i.e., the cost of plaintiffs' "cover" under UCC § 2-711 and 2-712.
According to plaintiffs, the forms did not stand upright, but rather leaned forward or sideways.
"Where a seller breaches the contract," as is alleged here, "the buyer may cover by making a substitute purchase of goods from another seller, provided that, such purchase is made in good faith and without unreasonable delay (see UCC 2-712 [1] additional citations omitted)." Walck Bros. Ag. Service, Inc. v Hillock, 5 AD3d 1058, 1060 (4th Dep't 2004).
This action is thus distinguishable from an instance where a buyer retained defective goods and thus could "'recover as damages only the loss resulting in the ordinary course of events from the seller's breach.'" Medinol Ltd. v Boston Scientific Corp., 346 FSupp2d 575, 596 (SDNY 2004); UCC 2-714 .
Defendant, now moves by Order to Show Cause for an order pursuant to CPLR §§ 3124 and 3126, (a) compelling plaintiffs to produce documents previously demanded by defendant, and (b) in the event of plaintiffs' refusal to produce such documents, imposing appropriate sanctions against plaintiffs.
Plaintiffs oppose the motion and cross-move for a protective order pursuant to CPLR § 3101(c) directing the return of a purportedly privileged document, which defendant annexed as Exhibit D to its motion; enjoining defendant from using said document at trial or depositions, and determining that the attorney-client privilege has not been waived.
According to plaintiffs' counsel, the document, which is typed on Fabulous Fit's letterhead and is a recitation of the facts surrounding this action, "was created by counsel's request prior to the drafting of a complaint and the commencement of the action."
In support of its motion, defendant argues that the documents sought directly relate to plaintiffs' allegations that the mannequins supplied by defendant were unsuitable for their intended purpose, and that as a result of defendant's alleged failure to provide these, goods on a timely basis, plaintiffs were forced to obtain them from another manufacturer at substantial additional cost.
Defendant further contends that evidence of plaintiffs' underlying purpose for ordering the goods, and the terms of their agreement to resell the goods to their own customer, are relevant to whether or not plaintiffs acted in "good faith" under UCC § 2-712(a) and are thus discoverable.
Plaintiffs, on the other hand, argue that the contract was solely between the parties to this lawsuit and set forth the required specifications and delivery deadline. In addition, plaintiffs did not pass on the additional costs incurred in procuring the replacements to their customer. Plaintiffs thus claim that defendant is improperly seeking discovery regarding communications plaintiffs had with their customers to create unfair leverage against plaintiffs in this highly competitive business.
Plaintiffs are directed to supplement their responses to defendant's discovery demands within 30 days of service of a copy of this order with notice of entry only to the extent of providing documents between Fabulous Fit and any party concerning the quality of the goods actually produced by defendant and any substitute, alternative or replacement goods obtained after plaintiffs' repudiation of the contract.
Plaintiffs need not respond to the remaining demands at issue, including defendant's requests for documents identifying the "purpose intended" for the goods which are the subject of the contract and documents concerning defendant's customer orders, as this Court finds that said requests seek information outside the scope of this action for breach of contract.
The cross-motion is granted as this Court finds that plaintiffs have met their burden of showing that their "client intended to maintain the confidentiality of the document, reasonable steps were taken to prevent disclosure," plaintiffs "acted promptly after discovering the disclosure to remedy the situation," and defendant, "will not suffer undue prejudice if a protective order against use of the document is issued (citations omitted)." Oakwood Realty Corp. v HRH Constr. Corp., 51 AD3d 747, 749 (2nd Dep't 2008). See also, John Blair Communications v Reliance Capital Group, 182 AD2d 578 (1st Dep't 1992).
Defendants are, therefore, precluded from using the document in question during depositions or at trial. This inadvertent exchange did not in any way waive the attorney-client privilege.
Counsel shall appear for a status conference in IA Part 39, 60 Centre Street — Room 208 on May 6, 2009 at 11:00 a.m. to coordinate all outstanding discovery.
This constitutes the decision and order of this Court.