Opinion
23509/2007.
Decided June 25, 2008.
PIRROTTI LAW FIRM LLC, by: Anthony Pirrotti, Jr., Esq., Attorneys for Plaintiff, Scarsdale, New York.
JONES GARNEAU, LLP, by: Steven T. Sledzik, Esq., Attorneys for Defendants, Scarsdale, New York.
Plaintiff Serge Dore' Selections Ltd. ("Plaintiff") moves for summary judgment, pursuant to CPLR § 3212, and for attorneys' fees, costs and disbursements, in connection with goods sold to Defendant Universal Wines and Spirits, LLC ("Universal LLC"). The liability of Universal LLC to pay for the goods is not disputed, though Universal LLC disputes its responsibility for the fees. Plaintiff, however, seeks to collect the underlying debt and its attorneys fees, not just from Universal LLC, but from two individuals, Defendants Jesse Kessler ("Kessler") and Carla Lewin ("Lewin").
Plaintiff has also named as a defendant "Universal Wines and Spirits" and alleges in its Complaint such entity is an entity authorized to conduct business in New York. Defendants' answer denies this allegation. Plaintiff has not submitted any evidence that "Universal Wines and Spirits" exists as an entity separate and independent of Defendant Universal LLC. The exhibits annexed by Plaintiff include a copy of a bounced check written on an account of Universal LLC, as well as purchase orders issued to Plaintiff by Universal LLC and by Plaintiff to Universal LLC. Defendants' attorney defines "Universal" as Universal LLC. Accordingly, the Court will ignore references to "Universal Wines and Spirits" as it has not been shown that any such entity exits.
Plaintiffs' motion for summary judgment requests that judgment be granted against the individuals as well as the entity. The individuals oppose the motion in its entirety; Universal LLC disputes its liability for the attorneys' fees.
BACKGROUND AND FACTS
Plaintiff is a New York corporation engaged in the sale and distribution of wine. This action arises out of Plaintiff's sale of wine to Universal LLC. Universal LLC has never paid for the wine, even though it admits to having received and accepted it and to having re-sold a portion of it. The Complaint contains four causes of action: breach of contract, account stated, quantum meruit and unjust enrichment. Plaintiff seeks payment for the wine in the sum of $112,372.92, plus interest, costs, disbursements and attorneys' fees.
The sale of the wine is documented by both an Invoice and a Purchase Order. The Invoice (#1578) is dated March 6, 2007, and is on letterhead of Universal LLC and describes 900 cases of wine, at a total price of $117,900,000, and was digitally signed by Leah B. Dedmon in the space for an authorized signature. Ms. Dedmon's signature is accompanied by her e-mail address at "universalwine.net" and is dated March 7, 2007 at 9:14 a.m. The Purchase Order is on Plaintiff's letterhead, lists 900 cases of wine, and a price of $117,900.00. (The wines listed are different only in that the Invoice called for 150 cases of Voyager Estate Cabernet Sauvignon 03 and the Purchase Order called for 150 cases of Voyager Cabernet Sauvignon 02). The Invoice is dated March 7, 2007 and was signed by the President of Universal LLC, Craig Diamond ("Diamond") . Diamond's signature is contained a box stating that:
Plaintiff's President avers in an affidavit that Diamond signed the Invoice. No affidavit was submitted by Diamond or, indeed, by anyone else with personal knowledge of the facts. Further, Defendants' answer admits that the Invoice was signed.
Purchaser agrees to pay this invoice as per the term stated above. Failure to pay this invoice will result in purchaser being responsible to reimburse Serge Dore Selections Ltd. for all attorney's fees, costs and disbursements incurred in collecting the money owed pursuant to this invoice and purchaser shall pay statutory interest on the amount of money remaining to be paid on this invoice from the first date that the money is due. . . .
Defendants, in their Answer to Plaintiff's Verified Complaint, do not dispute that the Invoice was sent to Universal LLC and accepted, signed by an authorized representative and faxed back to Plaintiff. It is further undisputed that the invoice was in the amount of $117,900. (See, Answer, ¶¶ 30-34).
On May 11, 2007, Plaintiff, with the agreement of Defendants, issued a Revised Invoice to Universal LLC containing a reduced number of cases of wine as well as a correspondingly reduced purchase price of $112,372.92. The box on the Revised Invoice which provided, inter alia, for the payment of attorneys' fees and containing a line for signature by the purchaser, was not signed. However, Defendants admit in their answer that the price of the wine was agreed upon at $112,372.92. ( Id., ¶ 66).
Plaintiff supplied the wine to Universal. The wine was accepted under Invoice Number 1578, as revised, on or about May 11, 2007. Defendants admit that some of the wine was sold to third parties. ( Id., ¶ 62). Defendants deny, in their answer, that "Plaintiff met all of its obligations in providing the wine to Universal" ( Id., ¶¶ 60, 62, 63, 66) but do not specify in what respect Plaintiff is said to have failed to meet its obligations.
Despite the issuance of three separate checks to Plaintiff, Defendants have yet to pay for the wine. On August 10, 2007, Universal LLC issued its check number 2470 to Plaintiff reflecting the revised invoice amount of $112,372.92. It is undisputed that Universal LLC instructed Plaintiff not to deposit this check. (Id., ¶ 42). Plaintiff held the check.
It is admitted that Plaintiff's President, Serge Dore', had met Kessler and Lewin on prior occasions. On August 20, 2007, Dore' sent Kessler an e-mail at 10:14 a.m. which, in the subject line stated "Invoice 1578". The e-mail began cordially enough, with Dore' wishing Kessler a good morning, commenting that it had been nice to have Kessler and Lewin at his home the day before, and promising that the door would always be open to people he likes, with Kessler and Lewin being included in that group. Dore' also expressed the hope that Kessler had a safe and not too exhausting drive to Washington, D.C. After that bit of pleasantness, Dore' got down to business and stated, somewhat more brusquely, "[i]n the interim, our invoice 1578 is still open . . . please forward the payment (bank transfer)". Dore' then told Kessler: "Have a good one".
Kessler replied to the e-mail that very afternoon (at 2:32 pm.), in an e-mail whose subject was listed as "Invoice 1578". Kessler was all business, getting directly to the point:
The bank is releasing the $919,263.25 hold' in the Universal account into the new Universal account by tomorrow. As soon as the funds are clear I will send a wire. I am the only signer currently on the account until the papers are signed by everyone. I will keep you posted. Thanks and I apologize for this nonsense.
This e-mail exchange is undisputed. (Ex. F; Answer, ¶ 51). However, the promised wire transfer was not forthcoming, ever.
On Friday, September 21, 2007, Kessler informed Dore' by e-mail that he was going to go "to amex to get a certified check for you so I can get the points. Let's meet up over the weekend to exchange checks. I really appreciate your being so understanding, and am very interested to discuss your consulting for Universal." The next day, Saturday, September 22, 2007, Kessler wrote to Dore' by e-mail at 10:30 a.m. to suggest that they meet at noon. Dore' responded at 11:01 a.m. that he would meet Kessler at 12:00 to pick up the check but could not make lunch. At 11:17, Kessler expressed regret that there would be no lunch meeting, and suggested that the check could be left for Dore' to pick up on Monday or it could be dropped off at Dore's office on Monday. Dore' countered, at 11:45, that Kessler should let him know where he was going to be on Monday morning and Dore' would meet him.
Kessler issued Plaintiff a personal check, numbered 291 in the amount of $112,373 dated September 24, 2007 and drawn on an account at Citibank maintained by Kessler and Lewin. The memo line of the check referenced "Invoice 1578". (Ex. G). There is nothing before the Court that explains or describes the relationship between Kessler and Lewin.
Evidently, the check was given to Dore' by Sunday, September 23, 2007, as that morning, at 10:41 a.m., Kessler e-mailed Dore', instructing him to "[j]ust keep my check and deposit it tomorrow." Kessler added that it had been great to see Dore' but that Dore' should let Kessler "know the amount of the check for accounting purposes." Later that day, at 7:43 p.m., Kessler e-mailed Dore', telling him "Serge, I need the amount of the check to move from the money market into the checking. I need to do it in the am, please let me know asap". Dore responded at 10:16 p.m., promising to forward the information first thing in the morning.
As promised, Dore' e-mailed Kessler at 8:46 a.m. on Monday, September 24, 2007, telling Kessler "the invoice 1578 is for $112,373.00". Kessler responded three minutes later: "I will call the bank and let you know when the transfer is complete. Thanks again."
At 12:08 p.m., Dore asked Kessler by e-mail if the transfer had been processed.
The next e-mail was on September 26, 2007. At 9:04 a.m., Kessler informed Dore as follows:
Dave informed me this morning that Universal is wiring you $75K. Have you made the check out that I gave you yet? If so, I need to send you a check for $39K in its place, or just deposit it for you. Please contact Dave Boera to coordinate the $75K and let me know what you would like me to do with the other check. Can you please rip up the check, as I am putting a stop payment on it? Thanks.
There was a further e-mail exchange which eventually resulted in an e-mail in which it was promised that Universal would be sending Plaintiff a check for the entire amount. Plaintiff received a check from Universal LLC, Number 6097, in the amount of $112,372.92. Plaintiff deposited the check on October 1, 2007, and then again on October 12, 2007, in a Citibank account. On both occasions the check "bounced" as evidenced by the notations "Return Reason A: Not Sufficient Funds" and "Return Reason C: Stop Payment."
In October, 2007, Plaintiff had its attorney write to Kessler and Lewin to demand full payment of Invoice 1578, together with interest and attorneys fees. No payment was made.
Plaintiff commenced this action on November 14, 2007 through the filing of a Summons and Verified Complaint. Defendants interposed a Verified Answer dated January 25, 2008, the answer having been verified by Jesse Kessler on that date. The Verified Answer contains a number of admissions, some conclusory denials, and four one-sentence affirmative defenses: failure to state a cause of action, equitable estoppel, unclean hands, and laches.
The Court notes that the venue of the verification is "State of Maryland" but without specification of the County. The Court also notes that Kessler's signature was taken by Linda Lee, who, by the stamp affixed to the verification, is identified as a Notary Public in Maryland. No certificate of her authority is provided. See CPLR 2309(c). Plaintiff makes no issue of these irregularities and the Court will ignore them for purposes of this motion.
On February 26, 2008 (about one month after joinder of issue), Plaintiff served the present motion for summary judgment. In support of its motion, Plaintiff submits an affirmation of its counsel, various exhibits (including the pleadings), and an affidavit from Serge Dore'. Defendants' opposition consists solely of an affirmation from defense counsel.
THE SUMMARY JUDGMENT STANDARD
The proponent of a motion for summary judgment carries the initial burden of production of evidence as well as the burden of persuasion. Alvarez v. Prospect Hospital, 68 NY2d 320 (1986). The moving party must tender sufficient evidence to demonstrate as a matter of law the absence of a material issue of fact. Failure to make that initial showing requires denial of the motion, regardless of the sufficiency of the opposing papers. Weingrad v. New York University Medical Center, 64 NY2d 851, 643-644 (1985); St. Luke's-Roosevelt Hospital v. American Transit Insurance Co., 274 AD2d 511 (2d Dept. 2000); Greenberg v. Manlon Realty, Inc., 43 AD2d 986 (2d Dept. 1974). Once the moving party has made a prima facie showing of entitlement of summary judgment, the burden of production shifts to the opponent, who must now go forward and produce sufficient evidence in admissible form to establish the existence of a triable issue of fact or demonstrate an acceptable excuse for failing to do so. Zuckerman v. City of New York, 49 NY2d 557, 562 (1980); Tillem v. Cablevision Systems Corp. , 38 AD3d 878 (2d Dept. 2007); Fleming v. Graham , 34 AD3d 525 (2d Dept. 2006).
There is no requirement that proof be submitted in the form of an affidavit, as opposed to other acceptable forms, such as deposition testimony. Muniz v. Bacchus, 282 AD2d 387 (1st Dept. 2001).
The court's function on a motion for summary judgment is issue finding rather than issue determination. Sillman v. Twentieth Century Fox Film Corp., 3 NY2d 395 (1957). Since summary judgment is a drastic remedy, it should not be granted where there is any doubt as to the existence of a triable issue. Rotuba Extruders v. Ceppos, 46 NY2d 223 (1978). Thus, when the existence of an issue of fact is even arguable or debatable, summary judgment should be denied. Stone v. Goodson, 8 NY2d 8 (1960); Sillman v. Twentieth Century Fox Film Corp., supra.
Here, Plaintiff has presented uncontroverted evidence that it provided Universal LLC with wine which Universal accepted and received and re-sold in part, without paying the agreed price of $112,372.92. It is not disputed that: (a) Universal LLC attempted to pay for the full amount of the wine by corporate check; (b) that check was withdrawn; (c) Kessler provided Plaintiff with a personal check of Kessler and Lewin for the full price of the wine; (d) the personal check was withdrawn; (e) Universal LLC provided a second corporate check which "bounced" twice and failed ultimately to be cash-able; and that (f) Universal LLC has an outstanding debt of $112,372.92 due to Plaintiff for the agreed price of the wine.
Defendants have failed to submit an affidavit of a member, officer, or employee of Universal to dispute the information set forth in Plaintiff's moving papers. Defendants have not submitted an affidavit from either Kessler or Lewin. Instead, Defendants' opposition papers rely solely on the assertions of their attorney who plainly lacks personal knowledge of the facts. It has long been recognized that an affidavit from counsel, unsupported by personal knowledge of the facts or by evidentiary materials (such as pleadings and deposition testimony) is without evidentiary value, Zuckerman v. City of New York, 49 NY2d 557, 563 (1980), and thus unavailing.
Only a genuine and material issue raised by evidentiary facts will suffice to defeat a properly made and supported summary judgment motion. Andre v. Pomeroy, 35 NY2d 361, 365 (1974); Dougherty v. Kinard, 215 AD2d 521, 522 (2d Dept. 1995). The Courts will not recognize a "feigned" issue, Garvin v. Rosenberg, 204 AD2d 388, 388 (2d Dept. 1994); a "speculative" one, Andre v. Pomeroy, 35 NY2d at 364, "the illusion of a factual issue", Marlow v. Board of Ed. of Ogdensburg City School Dist., 182 AD2d 889, 890 (3d Dept. 1992) or the "shadowy semblance" of an issue, S.J. Capelin Assocs. v. Globe Mfg. Corp., 34 NY2d 338, 341 (1974). Mere conclusions or unsubstantiated allegations are insufficient to raise a triable issue. Gilbert Frank Corp. v. Federal Ins. Co., 70 NY2d 966, 967 (1988).
Here, Defendants' attorney lacks personal knowledge of the facts and circumstances surrounding this transaction and, therefore, the assertions made by counsel as to the factual circumstances must be disregarded by the Court. While Defendants' answer is (at least purportedly) verified by Kessler, and thus could potentially serve as the functional equivalent of an affidavit, the allegations in the answer are entirely conclusory and are devoid of factual substance.
THE MOTION IS NOT PREMATURE AND DEFENDANTS
HAVE NOT SHOWN THAT A FACTUAL BASIS FOR OPPOSING THE MOTION CAN BE DEVELOPED THROUGH DISCOVERY
Defense counsel asserts that Plaintiff's motion for summary judgment is premature. However, CPLR § 3212 provides, in relevant part, that "[a]ny party may move for summary judgment in any action, after issue has been joined. . . ." As Defendants have served their Verified Answer to the Verified Complaint, issue has been joined and Plaintiff's summary judgment motion is authorized by CPLR 3212 and is not premature.
Defendants' counsel also asserts that, under CPLR 3215(f), the Court should permit Defendants discovery, meaning that the Court should deny Plaintiff summary judgment pending discovery. CPLR 3212(f) provides that if it should ". . . appear from affidavits submitted in opposition to the motion that facts essential to justify opposition may exist but cannot then be stated, the court may deny the motion or may order a continuance to permit affidavits to be obtained or disclosure to be had and may make such other order as may be just." However,
[f]or the court to delay action on the motion, there must be a likelihood of discovery leading to such evidence. The "mere hope" that evidence sufficient to defeat the motion may be uncovered during the discovery process is not enough.
Mazzaferro v. Barterama Corp., 218 AD2d 643, 644 (2d Dept. 1995) (citations omitted).
Defendants' counsel, in a conclusory two sentence paragraph, suggests that Defendants should be permitted to pursue discovery pursuant to CPLR 3212(f) as a result of alleged ". . . serious inconsistencies and discrepancies between the three invoices between the parties and no competent proof regarding acceptance of the first two invoices." However, Defendants failed to identify what they seek to "discover" and failed to explain why such facts are not currently available to Defendants. As noted previously, Defendants have not contested that the wine was ordered, that the agreed price was $112,372.92, that the wine was received and, in part, re-sold, that no payment was made to Plaintiff, that a corporate check was given and withdrawn, that Kessler exchanged various e-mails with Dore' and gave Dore' a personal check and then disavowed it, and that a corporate check was again given and was dishonored. Defendants have not submitted any affidavit from any person with knowledge of the facts and have not identified what information they believe Plaintiff has that will be obtained in discovery and provide a basis for opposing this motion. Accordingly, Defendants' reliance upon CPLR 3212(f) is misplaced.
THE LIABILITY OF UNIVERSAL LLC
It is undisputed that the wine was shipped to Universal LLC, received by Universal LLC and accepted by Universal LLC and that Universal LLC has not paid therefor. Defendants' opposition to the motion for summary judgment is silent as to the portion of the motion that seeks summary judgment as against Universal LLC. Since Plaintiff has demonstrated its entitlement to summary judgment against Universal LLC, and Universal LLC has not come forward with any admissible evidence that raises an issue of fact, or explained why such evidence could not be provided, Plaintiff is entitled to summary judgment as against Universal LLC.
THE LIABILITY OF KESSLER
Plaintiff asserts that Defendants Kessler and Lewin are personally liable for the outstanding debt to Plaintiff because they gave Plaintiff their personal check without any indication they were doing so in a corporate or representative capacity. Plaintiff also asserts that Kessler sent numerous e-mails to Plaintiff wherein he demonstrated his intent to assume liability for the debt of Universal LLC .
Plaintiff submits the e-mail exchange between Dore', President of Plaintiff, and Kessler. As previously noted, on Friday, September 21, 2007 at 7:52 a.m., Kessler e-mailed Dore' as follows:
. . . I am going to amex to get a certified check for you so I can get the points. Let's meet up over the weekend to exchange checks. I really appreciate you being so understanding . . .
Later, after Dore' and Kessler had exchanged e-mails regarding a meeting, Kessler e-mailed Dore' on Sunday, September 23, 2007 at 10:41 a.m., instructing Dore' to keep his check and deposit it, asking only that Dore' let him know the amount of the check for accounting purposes. This was followed by an e-mail that evening in which Kessler asked Dore' for "the amount of the check to move from the money market into checking" and requested the information as soon as possible because Kessler needed to "do it" in the morning. Dore' agreed to provide the information and did so at 8:46 a.m. on Monday, September 24, 2007, stating:
Good Morning . . . the invoice 1578 is for $112,373.00.
Kessler acknowledged the receipt of this information at 8:49 a.m:
I will call the bank and let you know when the transfer is complete. Thanks again.
As previously discussed, Dore' wrote to Kessler at 12:08 p.m. on Monday, September 24, 2007 to inquire as to whether Kessler had processed the transfer. However, there is no indication that Kessler responded to that question. Instead, two days later, on Wednesday, September 26, 2007, Kessler wrote to Dore', stating that Universal was going to wire $75,000 to Plaintiff, that Kessler would send a check for the $39,000 balance, and that Dore' should destroy Kessler's $112,373 check because Kessler was going to stop payment on it.
The e-mail exchange continued as follows:
(Dore' to Kessler — 9/26/07 at 9:38 am)
I still have your check. Since we both do business with Citibank it is easy to make a transfer and I will have the money in two hours. . . .
(Kessler to Dore' — 9/26/07 at 9:58 am)
Done. Just please follow up with Dave in regards to the Universal wire. I have put yet more money into Universal.
(Dore to Kessler — 9/26/07 at 10:01 am)
I tried to get a hold of Dave without success. I also tried to call Universal FL and there is no answer . . . kind of weird . . . Does the word DONE mean you executed the transfer?
(Kessler to Dore' — 9/26/07 at 10:06 am)
I meant done that I will have a transfer from my account to yours. Dave is reachable on his cell phone. And no, I have not completed it as of yet. I will go this afternoon.
(Dore' to Kessler — 9/26/07 at 11:43 am)
Please have the transfers completed today. . . .
According to Dore's affidavit, the e-mail exchange continued as follows:
(Dore' to Kessler — 9/27/07 at 3:38 pm) It is September 27th afternoon and I have not heard of you neither Dave. As per your yesterday's email I though we understood each other and we were clear. I was obviously wrong. You have been dragging me since my last visit in DC on August 8. At lunch: the check was on my desk . . . Late Afternoon: We'll get it tonight . . . At night: it was in your jacket . . . The morning after, by the door and you ad (sic) "I forgot it on my desk, we will express mail it today" . . . and you have been dragging me since. It is unacceptable and I consider that you abused of my comprehension and patience. I request that you resolve (as per last night email) the situation by transferring the amount of US 112,372.92 covering the Universal Wines Spirits invoice number 1578 due on July 24, 07 by tomorrow Friday 28th by noon.
(Kessler to Dore' — 9/27/07 at 3:54 pm)
While Dore's affidavit describes this e-mail as from him to Kessler, the context makes clear that it was from Kessler to Dore'.
Serge, I understand your frustration. Dave will be calling you immediately. . . .universal is sending you a check for the entire amount plus interest. No one is authorized to wire on the new account other than me. The only thing I can have done is send a check overnight and be done with this finally. Dave will provide you a check number and the tracking number.
(Dore' to Kessler-10/01/07 at 11:54 am)
I have received the check. Thanks.
(Dave Boera to Dore' — 10/05/07 at 8:19 am)
I believe if I have read the BOA account you tried to unsuccessfully deposit the check. The funds will be there by days end.
(Dore' to Dave Boera — 10/5/07 at 8:39 am) Are you talking about the check I received on Monday? (Dave Boera to Dore' — 10/05/07 at 8:57 am)
yes, I believe that is the one
(Dore' to Dave Boera — 10/05/07 at 8:59 am)
You are telling me that check is going to bounce?(Dave Boera to Dore' — 10/05/07 at 9:06 am)
It should not if you deposit it later today.
(Dore' to Dave Boera — 10/05/07 at 9:19 am) It has been deposit last Monday. (Dore' to Dave Boera — 10/05/07 at 11:39 am)
You have two options:
1.You immediately wire the money to the SDS account.
2.Your bounce check goes to the USA attorney's office.
(Dave Boera to Dore' — 10/05/07 at 11:44 am)
Serge
we will be more than happy to wire it today. Can you provide all the info so we can make the transfer.
(Dore' to Dave Boera — 10/05/07 at 2:32 pm)
It is the last chance; the money has to be in the account before 16:00 today.
Defense counsel contends that the individual Defendants are not personally liable for the debt owed to Plaintiff and sets forth various conclusory assertions in that regard. However, because no affidavit of personal facts was submitted by either individual Defendant, the general and conclusory comments of counsel may not be considered by the Court. Of moment, Defendants have not denied providing Plaintiff with a personal check, have not denied the e-mail exchange as set forth by Dore', and have not provided any factual information regarding the various meetings of the parties.
In support of its theory of liability against the individual Defendants, Plaintiff relies upon the Court of Appeals' holding in Rotuba Extruders, Inc. v. Ceppos, 46 NY2d 223 (1978) . In Rotuba, a plaintiff-corporation which sold goods to a defendant-corporation required the defendant to provide seven promissory notes to guarantee payment of the goods. The defendant provided the notes, which were personally signed by the CEO without any indication that the CEO was signing in his corporate capacity. The Court of Appeals, in reversing the order of the Appellate Division and granting Plaintiff's motion for summary judgment, stated, in relevant part:
The pertinent subdivision of section 3-403 of the New York Uniform Commercial code provides:
"An authorized representative who signs his own name to an instrument
(a) is personally obligated if the instrument neither names the person represented nor shows that the representative signed in a representative capacity . . .;"
***
Section 3-403 aims to foster certainty and definiteness in the law of commercial paper, requirements deriving from the necessity for takers of negotiable instruments to tell at a glance whose obligation they hold'. . . . To make commercial paper freely negotiable without undue risk' . . ., the basic law is that resort to extrinsic proof is impermissible when the face of the instrument itself does not serve to put its holder on notice of the limited liability of a signer. 46 NY2d at 228 (citations omitted).
***
. . . [the individual defendant] pointed to nothing that would tend to show that the parties regarded the obligation as a corporate one alone. . . .The nature of the transaction here gives no indication that regardless of the faces of the notes, corporate liability and none other was intended by the parties. . . . 46 NY2d at 231.
A like result was reached in Tropical Ornaments, Inc. v. Visconti, 115 AD2d 537 (2d Dept. 1985). There, an individual signed two checks on which were imprinted "J.G.S. Produce Co." When the checks were dishonored, suit was brought against the individual who contended that she had signed the checks in a representative, not individual, capacity. The Second Department held that plaintiff was entitled to summary judgment as against the individual. The checks did not bear any indication that defendant signed them in a representative capacity nor did they indicate that the name imprinted thereon was the name of a corporation. Here, the check written by Kessler does not indicate that it was written in a representative capacity and the check is imprinted with Kessler's and Lewin's name, not the name of any corporation or limited liability company.
Similarly, the Appellate Division, First Department held that the motion court correctly granted plaintiff's motion for summary judgment and ". . . correctly found an intent on the part of the individual defendant to assume liability for the debts of the corporate defendant of which he was president . . . in his attempt to settle with plaintiff by sending it his personal check, and in the documents of previous transactions between the parties addressed to the individual defendant as well as the corporation. . . .". Kelsol Diamond Co., Inc. v. Stuart Lerner, Inc., 286 AD2d 586, 587 (1st Dept. 2001). Although the Court in Kelsol did not provide a recitation of the underlying facts of the case, the holding is instructive on the issue of whether an individual defendant can be held responsible for a corporate debt by, among other things, sending a personal check to cover the debt.
More recently, the same proposition was enforced by the First Department in Nola Realty LLC v. DM M Holding L.L.C. , 33 AD3d 523 (1st Dept. 2006), where the down payment on a real estate contract, to be provided by a limited liability company, was provided through a bank check and by personal checks from three individuals. While the bank check was paid, the three personal checks were not paid due to stop payment orders. In reversing the denial of summary judgment, the First Department held that the three individuals had assumed personal liability by tendering personal checks to the escrow agent without indication that they were doing so in a representative capacity.
As shown by Plaintiff's moving papers, Kessler provided Plaintiff with a personal check of Kessler and Lewin drawn on their joint bank account. The memo line of the check referenced Plaintiff's invoice number (1578) and Kessler signed the check without reference to any position with Universal LLC. Indeed, Defendants, in their Verified Answer, deny that Kessler is an officer of Universal LLC. Moreover, as shown above, Kessler sent Plaintiff numerous e-mails referencing the manner in which he was going to make personal payment of Universal LLC's debt, and apologizing for the delay in payment.
The theory of liability as asserted against Kessler, however, is not one of liability on the contract with Plaintiff. Instead, Kessler's liability is based upon his signing an instrument for the payment of money to Plaintiff personally and with no indication that the payment is made in any sort of representative capacity. UCC § 3-403. Kessler's liability must be limited to the amount of the instrument he signed [the check in the amount of $112,373] plus statutory interest from the date of the check [September 24, 2007]. Indeed, there is no indication that Kessler ever saw the original Invoice from Plaintiff, the Revised Invoice from Plaintiff or knew that the invoice contained a promise to pay attorneys fees in the event of a default in payment. Certainly there is no indication in the e-mails between Kessler and Plaintiff that he was aware of such a clause and intended to pay attorneys fees and other penalties as indicated on the invoices in the event his check was not cashable.
A check is an instrument pursuant to the Uniform Commercial Code § 3-104(2)(b).
Accordingly, based upon the undisputed evidence, Plaintiff is entitled to summary judgment as to Kessler in the amount of $112,373 plus statutory interest from September 24, 2007.
THE LIABILITY OF LEWIN
On the other hand, Plaintiff has failed to show that it is entitled to summary judgment as to Lewin. The only evidence submitted by Plaintiff as to Lewin is that the check, written by Kessler, was drawn on an account Kessler maintained with Lewin. Lewin did not sign the check; indeed, there is no evidence that she knew or was aware that Kessler had signed the check. As indicated above, the predicate for liability under the Uniform Commercial Code against Kessler is his signature on the personal check from his and Lewin's joint account without any indication he was making payment in a representative capacity on behalf of Universal. Absent Lewin's signature on an instrument in her personal capacity, she cannot be held liable personally for Universal's debt to Plaintiff.
Moreover, the e-mails were between Dore' and Kessler; there are no e-mails from Lewin. Thus, Plaintiff has failed to proffer evidence that Lewin promised to pay for the debt personally or that Lewin signed an instrument in her individual capacity indicating an intent to personally pay the debt owed to Plaintiff.
While the Court may not consider the factual arguments of Defendants' counsel representations with regard to the personal liability of Lewin as he has no personal knowledge of the facts, this is of no moment as Plaintiff failed, in the first instance, to show its entitlement to summary judgment as against Lewin.
Because Plaintiff has failed to establish her personal liability for the debt under the Uniform Commercial Code or under any other theory, the motion should be denied as to Lewin.
ATTORNEYS' FEES
Plaintiff seeks to hold Defendants liable for its attorneys fees, costs and disbursements in connection with its attempts to collect the debt. To that end, Plaintiff cites to Defendants' Verified Answer, in which it is admitted that Universal accepted the initial Purchase Order and Invoice #1578, signed the Invoice, and faxed it back to Plaintiff. (See, Answer, ¶¶ 32,33). Plaintiff further points to Universal LLC's President's signature on the portion of the original Invoice in which Universal LLC agreed that its failure to pay the invoice would result in Universal's responsibility for all of Plaintiff's attorney's fees, costs and disbursements incurred in collecting the money owed, plus statutory interest form the first date that the money was due. Plaintiff submits that the Invoice constitutes an agreement between the parties that Universal LLC's failure to pay for the subject wine would result in the imposition of attorney's fees and the other costs set forth therein.
While the general rule is that ". . . attorneys' fees and disbursements are incidents of litigation and the prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties or by statute or court rule", Matter of A.G. Ship Maintenance Corp. v. Lezak, 69 NY2d 1, 5 (1986) (citations omitted), here, Plaintiff argues Universal LLC authorized an award of attorneys fees and disbursements when it signed the Invoice containing the clear and unambiguous language cited above.
Defendants, through counsel's affirmation, submit that Plaintiff cannot establish an agreement to pay counsel fees because the Revised Invoice, upon which Plaintiff is now suing, does not contain a signature by a Defendant or a representative of Defendants. Counsel further argues there was no meeting of the minds with respect to counsel fees, and that the modification of the initial invoice may constitute a waiver of rights under the prior agreement (citing UCC § 2-209, Modification, Rescission and Waiver, without further explanation). Defendants assert a triable issue of fact exists with regard to Plaintiff's claim for attorneys' fees.
In reply, Plaintiff submits that the original Invoice and the Revised Invoice are not two separate agreements, as defense counsel suggests, as they both bear the same invoice number, the same reference number, the same customer information and are for the same type of wine. Additionally, both invoices are dated March 7, 2007. The only difference between the two documents is the number of cases of wine and, as a result, the total amount due was reduced. Both documents contain the same language regarding the payment of attorneys' fees, though the Revised Invoice is not signed by a representative of Universal LLC.
Plaintiff asserts that the fact that a representative of Universal LLC did not sign the revised invoice is of no moment and that Defendants are bound by the clause because they accepted the goods and failed to raise an objection to its terms or request Plaintiff to modify and/or alter its terms.
New York Uniform Commercial Code § 2-207, entitled "Additional Terms in Acceptance or Confirmation" of a contract, provides, in relevant part that
. . . (2) additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless: . . . (b) they materially alter it.
Under New York law, a material alteration is one that would result in surprise or hardship if incorporated without the express awareness by the other party. Coosemans Specialties, Inc. v. Gargiulo, 485 F.3d 701, 708 (2d Cir. 2007), citing Bayway Ref. Co. v. Oxygenated Mktg. Trading A.G., 215 F.3d 219, 223 (2d Cir. 2000), citing UCC § 2-207 cmt. 4. "To carry the burden of showing surprise, a party must establish that, under the circumstances, it cannot be presumed that a reasonable merchant would have consented to the additional term.'" Id.
Here, Universal LLC cannot establish that the attorney's fees clause in the revised invoice constituted a material alteration of the contract. Indeed, there can be no surprise or hardship where Universal LLC signed the initial Invoice containing language identical to the provision now objected to. Additionally, Universal LLC accepted the goods under the revised invoice, thereby assenting to its terms. See, e.g., Coosemans Specialties, Inc. v. Gargiulo, supra, where the Court awarded a plaintiff-merchant attorneys' fees pursuant to a clause that was added later to an invoice. The Court found that defendants failed to offer any evidence to demonstrate either objective or subjective surprise over the attorneys' fee provision in plaintiffs' invoices. Since the Defendants in the case at bar did not submit an affidavit of a person with knowledge of the facts, surprise and/or hardship cannot be demonstrated. Likewise, there is no indication that there was any intervening offer from Universal LLC (between the time of the two invoices), much less one that expressly limited acceptance to the terms of the offer, and no notification was given by Universal LLC that it objected to the terms of the Revised Invoice.
The Court notes that the portion of Section 2-207(2) that makes additional terms binding applies only to merchants. There is no showing that Kessler or Lewin are merchants within the meaning of the Uniform Commercial Code. See U.C.C. § 2-104 (1).
Universal LLC's conduct in accepting the wine without objection to the terms of the Revised Invoice also renders it liable to Plaintiff for attorney's fees pursuant to U.C.C. § 2-207(3). That section provides that conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case, the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of the U.C.C. See also, Ernest J. Michel Co., Inc. v. Anabasis Trade, Inc., 72 AD2d 715, 716 (1st Dept. 1979) [where the Court upheld an arbitration provision in an agreement where the buyer signed and returned only the first of seven agreements holding that the buyer's conduct, in failing to object to the provision, implied acceptance thereof].
Further, Defendants have admitted in their answer that Invoice 1578 was modified as to the amount, $112,372.92. (Answer, ¶¶ 37,38). There is no evidence, or even an assertion, that there was any other modification of the contract, other than as to the relatively modest reduction in the quantity of wine and the price. There is no claim that there was any discussion between the parties as to a modification of the attorneys' fees provision.
Accordingly, Universal LLC should be held liable for the attorney's fees, costs and disbursements of Plaintiff in attempting to collect the debt for the wine in accordance with the terms of the Revised Invoice. However, Plaintiff has failed to establish that Kessler and Lewin are liable for Plaintiff's attorneys' fees. Neither was a party to the original Invoice, neither was a party to the Revised Invoice, and neither has been shown to have received or accepted the wine. Kessler's liability is by reason of his signature on a personal check, a liability which, as previously stated, is limited to the amount of the check, plus statutory interest. Plaintiff has not shown that Lewin has any liability for the principal amount, at least not yet.
Thus, the motion as respects attorneys' fees, costs and disbursements should be granted as to Universal LLC and denied as to Kessler and Lewin.
Universal LLC is entitled to a hearing as to the reasonableness of the amounts claimed. Hestnar v. Schetter, 284 AD2d 499 (2d Dept. 2001). Plaintiff has not set forth the amount sought for fees and expenses and has not provided any information or documentation as to this claim. Accordingly, the Court will direct Plaintiff to provide counsel for Defendants with an affirmation of services and with copies of all supporting documents by not later than 4:00 p.m. on July 11, 2008, with these documents to be filed with the Court, together with a Note of Issue, at the same time. Defendants shall serve and file opposition with the Court and upon Plaintiff by 4:00 p.m. on July 18, 2008 as to whether and, to what extent, it contests Plaintiff's demand. The parties shall appear before the Court on August 15, 2008 at 11:30 a.m. for the purpose of a hearing on any dispute as to attorneys fees and costs. Plaintiff shall also submit a proposed judgment for settlement before the Court on August 15, 2008 at 11:30 a.m. Such proposed judgment may contain a provision for the severance and continuation of this action as against Lewin, if Plaintiff be so advised to pursue such claims. The Court schedules a Preliminary Conference to schedule further proceedings with respect to the claims against Lewin, which Conference shall be held on August 15, 2008 at 11:15 a.m.
CONCLUSION
The Court has considered the following papers in connection with this motion:
1)Notice of Motion dated February 25, 2008; Affirmation of Anthony Pirrotti, Jr., Esq. dated February 25, 2008; Affidavit of Serge Dore' sworn to February 25, 2008, and the exhibits annexed thereto, submitted with proof of service;
2)Affirmation in Opposition of Steven T. Sledzik, Esq. dated March 20, 2008, submitted with proof of service; and the
3)Reply Affirmation of Anthony J. Pirrotti, Jr., Esq. dated March 27, 2008, and the exhibits annexed thereto.
Based upon the foregoing papers, and for the reasons set forth above, it is hereby
ORDERED that the motion of Plaintiff Serge Dore' Selections Ltd motion for summary judgment pursuant to CPLR § 3212 is granted in part and denied in part as hereinafter set forth; and it is further
ORDERED that the motion of Plaintiff Serge Dore' Selections Ltd. for summary judgment as against Defendant Carla Lewin is denied; and it is further
ORDERED that the motion of Plaintiff Serge Dore' Selections Ltd. for summary judgment as against Defendants Universal Wines and Spirits LLC in all respects;
ORDERED that Plaintiff shall have judgment against Defendant Universal Wines and Spirits, LLC in the sum of $112,372.92, plus interest at the statutory rate from July 24, 2007, together with reasonable attorneys fees, costs and disbursements incurred in connection with collection of the aforesaid sum; and it is further
ORDERED that Plaintiff shall have judgment against Defendant Jesse Kessler in the sum of $112,373, plus interest at the statutory rate from September 24, 2007; and it is further; and its further
ORDERED that Plaintiff is not entitled to recover from Defendant Jesse Kessler attorneys' fees, costs and disbursements incurred in connection with collection of the sum of $112,372.92; and it is further
ORDERED that to the extent Plaintiff seeks recovery of attorneys' fees and costs and disbursements, Plaintiff shall serve and file, on or before July 11, 2008 at 4:00 p.m., (a) an affirmation of services, together with copies of all bills and other documentation in support thereof and (b) a Note of Issue; and it is further
ORDERED that Defendants shall serve and file any opposition to the amount sought by Plaintiff for attorneys' fees, costs and disbursements on or before July 18, 2007, at 4:00 p.m.; and it is further
ORDERED that the Court shall hold a hearing on Friday, August 15, 2008 at 11:30 a.m. as to the amount to be awarded to Plaintiff for attorneys' fees, costs and disbursements; and it is further
ORDERED that Plaintiff shall, pursuant to the provisions of 22 N.Y.C.R.R § 202.48, submit a proposed judgment to the Court for settlement on August 15, 2008 at 11:30 a.m., with the amount to be awarded for attorneys fees and costs being left blank so that the Court may insert the amount awarded at the conclusion of the hearing ordered herein; and it is further
ORDERED that the proposed judgment to be submitted by Plaintiff may contain a provision for the severance, and continuation, of this action as against Defendant Carla Lewin, if Plaintiff be so advised; and it is further
ORDERED that, in the event counsel for the parties stipulate as to the amount to be awarded for attorneys fees and costs, counsel shall submit such stipulation, together with a proposed judgment, to the Court promptly, with such stipulation to provide that the hearing ordered herein is not necessary; and it is further
ORDERED that the Court will conduct a Preliminary Conference with counsel on August 15, 2008 at 11:15 a.m. with respect to the scheduling of further proceedings in this action as respects Defendant Carla Lewin; and it is further
ORDERED that the hearing date, Preliminary Conference, and dates for submissions hereinabove provided may not be adjourned without the prior written permission of this Court.
The foregoing constitutes the Decision and Order of this Court.