Niagara Transformer Corp. v. Baldwin Technologies, Inc.
MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 6/12/13. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
NIAGARA TRANSFORMER CORPORATION
Civil Action No. DKC 11-3415
BALDWIN TECHNOLOGIES, INC.
Presently pending and ready for review in this breach of
The issues have been fully briefed,
(ECF No. 21).
and the court now rules, no hearing being deemed necessary.
Local Rule 105.6.
For the following reasons, Niagara’s motion
will be granted.
headquarters in College Park, Maryland.
Niagara is a New York
corporation with its principal offices in Buffalo, New York.
delivery order to furnish and install a rotary uninterruptible
power supply (“RUPS”) system for Phase I of a project at the
(ECF No. 22-5, Baldwin Aff. ¶ 5).
system functioned as a back-up source of power for NIST’s campus
(ECF No. 21-2, Ex. 2, Baldwin Dep. at 11).1
party SatCon Power Systems (“SatCon”) served as a sub-contractor
for BTI that, inter alia, supplied certain materials for Phase I
generator, flywheel, and motor), as well as transformers, core
The exhibits attached to Niagara’s motion for summary
authenticating affidavit or declaration.
Until recently, this
oversight may have precluded consideration of the documents at
See, e.g., Orsi v. Kirkwood, 999 F.2d 86, 92 (4th
Cir. 1993) (unsworn, unauthenticated documents cannot be
considered on a motion for summary judgment).
amendments to Fed.R.Civ.P. 56(c)(2), however, “‘eliminated the
unequivocal requirement that documents submitted in support of a
summary judgment motion must be authenticated.’”
Siemens Healthcare Diagnostics, Inc., No. DKC 11-0769, 2012 WL
3136457, at *6 (D.Md. July 31, 2012) (quoting Akers v. Beal
Bank, 845 F.Supp.2d 238, 243 (D.D.C. 2012)).
Instead of “a
authenticated’),” Rule 56(c)(2) now prescribes a “multi-step
process by which a proponent may submit evidence, subject to
objection by the opponent and an opportunity for the proponent
to either authenticate the document or propose a method to doing
so at trial.”
Foreword Magazine, Inc. v. OverDrive, Inc., No.
10-cv-1144, 2011 WL 5169384, at *2 (W.D.Mich. Oct. 31, 2011).
Importantly, “the objection [now] contemplated by the amended
Rule is not that the material ‘has not’ been submitted in
admissible form, but that it ‘cannot’ be.”
Ridgell v. Astrue,
No. DKC 10–3280, 2012 WL 707008, at *9 (D.Md. Mar. 2, 2012)
(quoting Foreword Magazine, 2011 WL 5169384, at *2). Here, BTI
Accordingly, the exhibits will be considered as being what they
purport to be.
transformers and core reactors from Niagara.
In anticipation of Phase II of the project, BTI contacted
SatCon in early 2006 to obtain a price quote for a second set of
the materials SatCon supplied in Phase I.
Baldwin Dep. at 20-21).
(ECF No. 21-1, Ex. 2,
On January 20, 2006, Niagara provided a
core reactor, priced at $68,978.00.
(ECF No. 22-6, at 1-2).
The January Quotation states that shipment will occur “16-20
weeks after receipt of approved drawings.”
Conditions of Sale.
(Id. at 3).
(Id. at 2).
Paragraph 2 of that document
thirty (30) days from the date of shipment.”
3 bars Niagara from being held liable “for delay in delivery due
limited to, acts of God, . . . floods, . . . and inability due
acceptance of orders.”
Paragraph 10 is titled “Finance
Charge” and provides that “[a]ll past due accounts subject to a
service charge of 1 ½% per month (18% per annum).”
According to Mark Baldwin, the CEO of BTI, SatCon forwarded
the January Quotation to BTI.
(ECF No. 21-2, Ex. 2, Baldwin
Government with a quotation for Phase II of the project.
No. 22-5, Baldwin Decl. ¶ 12).
According to Mr. Baldwin, this
quotation included an estimated completion date for Phase II
(Id. ¶ 13).
Later in February, SatCon requested that BTI work directly
with Niagara regarding the purchase of the equipment needed for
(ECF No. 21-2, Ex. 2, Baldwin Dep. at 24-25).
February 27, 2006, Niagara provided a quotation directly to BTI
priced at $58,393.00; and (2) an iron core reactor, priced at
(ECF No. 21-2, Ex. 3).
The February Quotation
purchase order” and makes no mention of drawings.
the January Quotation, the February Quotation attached Niagara’s
General Terms and Conditions of Sales.
After the Government awarded BTI the delivery order for
Phase II of the project, BTI sent a purchase order directly to
Niagara on March 15, 2006.
(ECF No. 21-1, Ex. 4).
order requests the following:
(1) one “E-Switchgear,” described
as “Item #1 per attached letter dated January 20, 2006” at a
rate of $58,393.00, plus $1,705.00 for freight; and (2) one “ESwitchgear,” described as “Item #2 [per attached letter],” at a
rate of $68,978.00, plus $1,705.00 for freight.
column titled “Expected,” the purchase order states “7/5/2006.”
The purchase order attached the January Quotation.
On March 16, 2006, Niagara sent a fax to BTI stating that
“[w]e acknowledge and thank you for your Purchase Order 37751170” and that “[p]lease note per my February 27, 2006 quotation
our delivery is out to 30 weeks A[fter] R[eceipt of] O[rder] for
(ECF No. 21-2, Ex. 5).
On April 3, Niagara
sent BTI an acknowledgement form, which lists an estimated ship
date of October 13, 2006.
(ECF No. 21-2, Ex. 6).
however, does not recall receiving any indication that Niagara
would be unable to meet a July delivery date until sometime
later in April.
(ECF No. 21-2, Ex. 2, Baldwin Dep. at 32-33).
Mr. Baldwin avers that, in early April 2006, Niagara informed
him that its “efforts were being diverted to supplying equipment
in support of the Hurricane Katrina recovery efforts.”
schedule for Phase II to account for an October delivery date
and communicated a new estimated completion date of November 30
to the Government.
(ECF No. 21-2, Ex. 2 Baldwin Dep. at 33-34).
On May 11, 2006, Niagara faxed BTI a copy of its credit
application and included a cover page advising that that “it had
not been able to improve from the October [delivery] date” but
“would continue to expedite.”
(ECF No. 22-10, at 1).
day, Mr. Baldwin, on behalf of BTI, signed and completed the
(ECF No. 21-2, Ex. 7).
Directly above his
signature, the credit application states that “[c]ustomer agrees
to pay reasonable collection and attorney costs for any past due
amounts that are placed for collection.”
(Id. at 74).
In a letter dated November 6, 2006, Niagara advised BTI
that the Buffalo area had received an early winter storm that
caused extensive power outages and flooding.
(ECF No. 21-2, Ex.
Niagara further advised that its plant was without power
from October 12 through October 17 and that, even once its power
was restored, many employees were unavailable to work.
Niagara explained that this situation, combined with “a very
full schedule,” meant that delivery of BTI’s order “will be
delayed to the end of November.”
that “we are working around the clock to try and reduce this
shipping delay as much as we can as quickly as we can.”
In a separate letter also dated November 6, 2006, Niagara
advised that it had “been experiencing several delays on this
letter stated that “[p]resently we are looking at the third week
of December for a ship date” and that “[we] will be happy to
talk with your customer to reiterate that the order delay is due
to production problems at [Niagara] and not the cause of [BTI].”
According to Mr. Baldwin, Niagara contacted BTI
experienced another setback because of a roof collapse in its
(ECF No. 22-5, Baldwin Decl. ¶ 28).
informed BTI that the delivery date would be pushed back again
to the third or fourth week of December.
(Id. ¶ 29).
Mr. Baldwin represents that, during this time period, the
Government repeatedly notified BTI that it was dissatisfied with
(ECF No. 22-5, Baldwin Decl. ¶ 31).
some of the requested concessions, at its own expense, including
(Id. ¶ 33).
Niagara ultimately shipped the equipment on December 18,
(ECF No. 21-2, Ex. 2, Baldwin Dep., at 137).
At that time, work on Phase II of the project had stopped for
eventually installed the Niagara equipment in April 2007.
It is undisputed, however, that BTI has never paid
December 18, 2006.
(ECF No. 21-2, Ex. 11).
On September 7, 2007, the Government issued a “Notice of
Termination for Cause” to BTI, ending BTI’s work on the RUPS
(ECF No. 21-2, Ex. 12).
The Notice of Termination
failure to meet either its original completion date or several
revised completion dates.
The Notice does not reference Niagara
or Niagara’s equipment.
Mr. Baldwin maintains,
however, that but for Niagara’s failure to deliver the equipment
by October 2006, BTI would have completed Phase II by the end of
(ECF No. 21-2, Ex. 2, Baldwin Dep., at 78).
disclose this termination on all of its bids for contracts with
the Government, effectively making BTI ineligible to receive any
such contracts and causing a significant loss in profits.2
On September 4, 2008, BTI filed suit against the
Government in the United State Court of Federal Claims, alleging
that NIST improperly and unlawfully terminated its contract.
(ECF No. 21-2, Ex. 8).
According to Niagara, BTI later
voluntarily dismissed its suit against the Government. (ECF No.
21-1, at 4).
On November 28, 2011, Niagara filed suit against BTI in
this court, asserting a single breach of contract count based on
BTI’s failure to pay the bargained-for price of $130,781.00 for
the equipment delivered in December 2006.
(ECF No. 1).
December 29, 2011, BTI filed an answer to the complaint and a
counterclaim, asserting a breach of contract count based on its
contention that Niagara’s failure to deliver the equipment on
time constituted a material breach of the parties’ contract and
(ECF No. 6).3
Following discovery, Niagara moved
for summary judgment on both its breach of contract claim and
(ECF No. 21).
BTI filed an opposition (ECF
No. 22), and Niagara replied (ECF No. 23).
Standard of Review
Summary judgment may be entered only if there is no genuine
issue as to any material fact and the moving party is entitled
In its interrogatory responses, BTI explains that this
(1) $706,000 in payment “held back” by NIST in connection with
Phase II of the project; (2) $600,000 in lost profits resulting
from the Government’s rejection of BTI’s bid for a “Bear Primary
Power Units” contract; (3) $1,600 in legal fees paid to
litigation counsel in this action; (4) $47,288 in legal fees
paid to BTI’s counsel in its lawsuit against the Government; and
(5) $10,000 in accounting fees incurred in connection with a
federal audit of the RUPS project.
(ECF No. 21-2, Ex. 14, at
to judgment as a matter of law.
Fed.R.Civ.P. 56(a); Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986); Emmett v. Johnson,
inappropriate if any material factual issue “may reasonably be
resolved in favor of either party.”
Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 250 (1986); JKC Holding Co. LLC v. Wash.
Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir. 2001).
“A party opposing a properly supported motion for summary
judgment ‘may not rest upon the mere allegations or denials of
showing that there is a genuine issue for trial.’”
Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir.
2003) (quoting former Fed.R.Civ.P. 56(e)).
proof . . . will
“A mere scintilla of
Peters v. Jenney, 327 F.3d 307, 314 (4th Cir. 2003).
evidence is merely colorable, or is not significantly probative,
summary judgment may be granted.”
249–50 (citations omitted).
Liberty Lobby, 477 U.S. at
At the same time, the facts that
are presented must be construed in the light most favorable to
the party opposing the motion.
Scott v. Harris, 550 U.S. 372,
378 (2007); Emmett, 532 F.3d at 297.
Choice of Law
Uniform Commercial Code (“the U.C.C.”), as adopted by New York,
governs the parties’ claims because their contract was formed in
New York and is one for the sale of goods.
(ECF No. 21-1, at 6
In its opposition, BTI does not specifically address
choice of law, but cites to both New York and Maryland law.
(See generally ECF No. 22).
For the reasons that follow, New
York’s U.C.C. will be applied.
rules of Maryland, the forum state, apply.
See Klaxon Co. v.
Stentor Electric Mfg. Co., 313 U.S. 487, 497 (1941).
provision that applies where, as here, the parties have not
affirmatively agreed to application of a particular state’s law:
In the absence of an agreement effective
under subsection (a) of this section, and
except as provided in subsection (c) of this
section, the Maryland Uniform Commercial
Code applies to transactions bearing an
appropriate relation to this State.
Md. Code Ann., Com. Law § 1-301(b).4
None of the exceptions set forth in Subsection (c) to
Section 1-301 apply here.
Although this provision would seem to counsel in favor of
dispute, this court has rejected a “restrictive, forum oriented
interpretation” of the statute that would apply the law of the
“appropriate relation” to the transaction in question.
Section 1-301, but the Official Comment to the provision states
that “the question [of] what relation is ‘appropriate’ is left
to judicial decision” and is “not strictly bound by [choice of
law] precedents established in other contexts.”
Com. Law § 1-301, cmt. 3.
Md. Code Ann.,
Thus, as the Fourth Circuit observed
in a case applying South Carolina’s U.C.C., “[t]he majority of
courts . . . has defined ‘appropriate relation’ in accord with
the dominant trend in modern conflict of laws analysis, under
relationship’ to the matter at issue is applied.”
In re Merritt
Dredging Co., Inc., 839 F.2d 203, 206 (4th Cir. 1988).
Veneers involved the interpretation of the predecessor to
Section 1-301, which (prior to June 1, 2012) was codified at
Section 1-105 of Maryland’s Commercial Code.
See Veneers, 375
F.Supp. at 600.
The Official Comment to Section 1-301 states
that the provision “is substantively identical to former Section
1-105” and that “[c]hanges in language are stylistic only.” Md.
Code Ann., Com. Law § 1-301, cmt. intro.
In both Veneers and Merritt Dredging, the court ultimately
looked to the relevant section of the Restatement (Second) of
Conflicts of Laws (“the Restatement”) to determine which state
See Veneers, 375 F.Supp. at 601 (applying Section 216
of the Restatement to a dispute about a negotiable instrument);
Merritt Dredging, 839 F.2d at 206-07 (applying Section 244 of
the Restatement to a dispute involving the conveyance of an
interest in chattel).
Therefore, to determine which state’s law
applies to the instant dispute, it is appropriate to consider
the factors set forth in Section 188 of the Restatement, which
include the place of contracting, the place of negotiation, the
place of performance, the location of the subject matter of the
contract, and the domicile, residence, place of incorporation,
and place of business of the parties.
of Conflicts of Laws § 188 (2012).
See Restatement (Second)
These factors are to “be
evaluated according to their relative importance with respect to
the particular issue.”
Application of these non-exclusive factors here compels the
conclusion that New York has the most significant relationship
to the parties’ dispute.
Pursuant to Niagara’s General Terms
and Conditions of Sale, formation of the contract occurred upon
Niagara’s receipt of BTI’s purchase order at its headquarters in
Buffalo, New York.
There is no clear evidence in the record
regarding where the parties negotiated the contract, rendering
the second factor neutral.
As to the third factor, the primary
Niagara manufactured the equipment and to where BTI was supposed
to remit payment.6
In addition, New York is also the place where
including those purportedly caused by the October 2006 weather
events in the Buffalo area, the heavy workload at Niagara’s
Buffalo factory, the design complications associated with the
reactor, and the roof collapse at Niagara’s factory.
factor (i.e., the location of the parties) is also neutral, as
headquarters in College Park, Maryland, while Niagara is a New
On balance, then, New York appears to have the most
Article 2 of New York’s U.C.C. will be applied.
Niagara’s Claim for the Purchase Price and BTI’s
Counterclaim for Damages Caused by Delay
judgment as a matter of law on its breach of contract claim
because the undisputed facts show that BTI accepted delivery of
Neither party argues that the laws of Colorado – the state
where the equipment was ultimately delivered and used by BTI –
the equipment and therefore is obligated to pay the agreed-upon
(ECF No. 21-1, at 5-6).
Niagara further argues
that BTI “is not entitled to any offset against the amount due”
delivery because BTI never provided notice that it considered
that delay to constitute a breach.
(Id. at 6-7).
below, Niagara’s arguments have merit and are dispositive of
both its breach of contract claim and BTI’s counterclaim for
Generally, where a buyer accepts goods, a buyer must pay
the full purchase price for those goods.
N.Y. U.C.C. § 2–
607(1); see also Orbis Co. v. Rivera, 529 N.Y.S.2d 104, 105
To establish a prima facie claim for the
purchase price of accepted goods, a seller must demonstrate the
that it sold and delivered certain goods to the
buyer at the buyer’s request; that the goods were of reasonable
value or agreed price; and that the buyer accepted the goods
without paying, despite demand by the seller.
See, e.g., Boise
N.Y.S.2d 374, 374 (N.Y.App.Div. 2006).
Here, the parties agree that they entered into a valid and
manufacture and sell a transformer and reactor to BTI for the
purchase price of $130,781.00.
Although the parties dispute
October 2006, their disagreement on this particular point is
immaterial because it is undisputed that Niagara did not deliver
untimely under either deadline.
Despite its use of the equipment and
The record is also unequivocal
project in September 2007.
accruing on that amount on January 18, 2007 (i.e., thirty (30)
days after shipment) pursuant to Niagara’s General Terms and
Conditions of Sale.
Accordingly, Niagara has met its
facie burden of establishing BTI’s liability for the agreed-upon
purchase price of the equipment.
purchase price and is itself entitled damages as a result of
Niagara’s untimely delivery, which BTI contends constituted a
material breach of the parties’ agreement.
(See ECF No. 22, at
Under the U.C.C., “a buyer may defeat or diminish a
interposing a valid counterclaim for breach of the underlying
Created Gemstones v. Union Carbide Corp., 47
(subsection (3) of Section 2–607) he may recover as damages for
any non-conformity of tender the loss resulting in the ordinary
course of events from the seller’s breach as determined in any
buyer, under certain circumstances, to “deduct all or any part
of the damages resulting from any breach of the contract from
breached the underlying contract, the seller typically is not
entitled to judgment on a goods sold-and-delivered theory until
Gemstones, 47 N.Y.2d at 255; Flick Lumber Co., Inc. v. Breton
Indus., Inc., 636 N.Y.S.2d 169, 170 (N.Y.App.Div. 1996).
Importantly, however, a buyer who has accepted goods “must
discovered any breach notify the seller of breach or be barred
from any remedy.”
N.Y. U.C.C. § 2–607(3).
The notice given by
the buyer “need only alert the seller that the transaction [was]
litigation need be included.
Computer Strategies v. Commodore
Bus. Machs., 483 N.Y.S.2d 716, 723 (N.Y.App.Div. 1984) (citing
U.C.C. § 2-607 cmt. 4); see also In re Indesco Int’l, Inc., 451
B.R. 274, 305 (Bankr.S.D.N.Y. 2011) (“[T]he drafters of the UCC
did not intend a rigorous test to determine the sufficiency of
notice; it can be oral as well as written, and it need not
quotation marks omitted).
A buyer who fails to comply with Section 2-607(3) is barred
not only from “defending the seller’s suit” based on the alleged
breach but also from “maintaining an action to recover damages.”
14 Williston on Contracts § 40:20 (4th ed. 2013); see also N.Y.
U.C.C. § 2-714 cmt. 1 (“[t]he buyer’s failure to notify of his
remedies under either” Section 2-714, which allows a buyer who
has accepted goods to recover damages caused by the seller’s
breach, or Section 2-717, which allows a buyer to deduct damages
caused by a breach from any part of the purchase price still
Thus, to defeat summary judgment where the seller has
made out a prima facie case for non-payment of accepted goods, a
buyer seeking damages either in the form of a setoff or via a
counterclaim bears the burden of introducing “specific evidence”
showing that the notice requirement has been satisfied.
Slavin & Sons Ltd. v. Glatt Gourmet Cuisine, Inc., 877 N.Y.S.2d
857, 860 (N.Y.Sup.Ct. 2009).7
In its opening brief, Niagara’s argument regarding notice
is confined to Section II, titled “Niagara Is Entitled to
Summary Judgment on its Breach of Contract Claim,” and is not
In its opposition, BTI does not cite any specific evidence
indicating that, following its acceptance of the equipment in
December 2006, BTI ever notified Niagara that it considered the
delivery delay to be a breach of the parties’ contract.
ECF No. 22-3, at 9-11).
Instead, BTI maintains that the precommunications
demonstrates that Niagara was aware that its delay violated the
parties’ agreement and “at least implies that BTI had informed
cites the numerous letters and phone calls by Niagara in the
fall of 2006 wherein Niagara notified BTI that delivery of the
equipment would be delayed beyond October 2006.
(See ECF No. 21-1, at 5-11).
In its reply,
Niagara clarifies that BTI’s failure to provide notice bars BTI
“from any remedy as a matter of law,” including BTI’s
counterclaim for damages.
(ECF No. 23, at 1-2; 9-10).
general rule, “an argument raised for the first time in a reply
brief or memorandum will not be considered.”
Clawson v. FedEx
Ground Package Sys., Inc., 451 F.Supp.2d 731, 734 (D.Md. 2006).
Courts do, however, have discretion to consider newly raised
issues “in appropriate circumstances,” including where “the
counterarguments were addressed in the opposition.” Id. Here,
underpinnings of Niagara’s lack-of-notice argument as well as
the legal significance thereof in its opposition.
In light of
this opportunity and the unambiguous language of Section 2607(3)(a) barring a non-complying buyer from “any remedy,”
Niagara’s arguments regarding notice will be considered as
applying both to its breach of contract claim and BTI’s
counterclaim for damages.
satisfied Section 2-607(3) under New York law.
purposes, the notice requirement established by Section 2-607(3)
serves “not to inform the seller of his own act, but to reveal
to him that the buyer chooses to assert the act as a breach and
Sterling Factories, Inc., No. 89-cv-4257, 1999 WL 178785, at *6
similar notice requirement in a precursor to New York’s U.C.C.:
The notice ‘of the breach’ required [by the
statute] is not of the facts, which the
seller presumably knows quite as well as, if
not better than, the buyer, but of buyer’s
claim that they constitute a breach.
purpose of the notice is to advise the
seller that he must meet a claim for
damages, as to which, rightly or wrongly,
the law requires that he shall have early
Am. Mfg. Co. v. U.S. Shipping Bd., 7 F.2d 565, 566 (2d Cir.
1925); see also Aqualon Co. v. Mac Equip., Inc., 149 F.3d 262,
266 (4th Cir. 1998) (Virginia law) (explaining that notice is
required even where a seller is aware the delivery is delayed
Williston on Contracts § 714 (3d ed. 1961)).8
As this precedent illustrates, Niagara’s knowledge of the
607(3), as are any pre-acceptance expressions of dissatisfaction
What matters is whether BTI ever notified Niagara that,
believed the transaction to be troublesome because of the delay.
BTI points to no evidence indicating (let alone establishing)
that such notification occurred in the months or years following
Niagara’s delivery when it filed its answer and counterclaim in
the instant lawsuit on December 29, 2011.
Although BTI does not
607(3)(a), there is a split of authority regarding whether a
But see Jay V. Zimmerman Co. v. Gen. Mills, Inc., 327
F.Supp. 1198, 1204 (E.D.Mo. 1971) (concluding that Section 2607(3) does not apply in cases involving late delivery because
“[i]t would be an unreasonable, if not absurd” to require a
renewed notice of breach where “both the seller and the buyer
are necessarily fully aware prior to tender that the seller’s
contract obligation to timely deliver has not been complied
As noted by the Fourth Circuit, “[b]oth previous and
subsequent cases have rejected the reasoning of Jay V. Zimmerman
Aqualon, 149 F.3d at 266 (citing E. Air Lines, Inc. v.
McDonnell Douglas Corp., 532 F.2d 957, 971 (5th Cir. 1976); Am.
Mfg., 7 F.2d at 566; Se. Steel Co. v. W.A. Hunt Constr. Co., 301
S.C. 140, 147 (S.C.Ct.App. 1990)).
buyer’s complaint (or, as here, a buyer’s assertion of a defense
Compare, e.g., Lynx, Inc. v. Ordnance Prods., Inc., 273 Md. 1,
element of a buyer’s cause of action, “the institution of an
regarded as a notice of the breach contemplated under . . .
Prods. Liab. Litg., 155 F.Supp.2d 1069, 1110 (S.D.Ind. 2001)
(Tennessee and Michigan law) (concluding that “the filing of a
complaint may be sufficient to satisfy the notice of breach
requirement of § 2–607 under certain circumstances”).
It does not appear that the New York Court of Appeals has
specifically addressed the issue.
In Panda Capital Corp. v.
Kopo International, Inc., the Appellate Division of the Supreme
Court of New York seemingly embraced the view that a judicial
complaint can satisfy Section 2-607(3)(a), observing that “the
themselves constituted . . . notice.”
662 N.Y.S.2d 584, 586-87.
Significantly, however, the Panda Capital court also observed
that the seller “had repeatedly made its objections to [the
buyer’s] pattern of performance” known prior to bringing suit.
Id. at 587.
Thus, Panda Capital cannot be read as establishing
a per se rule that a judicial complaint or counterclaim, without
other forms of pre-suit notice, is always enough to create a
triable issue of fact with respect to whether Section 607(3)(a)
has been satisfied.
satisfy the provision’s timing requirement.
a buyer notifies the seller of a breach “within a reasonable
governed by a standard of reasonableness.
Cliffstar Corp. v.
Elmar Indus. Inc., 678 N.Y.S.2d 222, 223 (N.Y.App.Div. 1998).
In some circumstances, however, a buyer’s delay in providing
notice can be deemed unreasonable as a matter of law.
Corp. v. Sainty Int’l Am. Inc., No. 05-cv-2944, 2008 WL 2944862,
at *7 (S.D.N.Y. Aug. 1, 2008) (New York law).
For example, a
seller unreasonably delays in providing notice under Section 2607(3) by waiting to complain about the buyer’s late delivery of
goods for more than eight months after accepting the untimely
delivery and then doing so only in response to the seller’s suit
Mount Vernon Mills, Inc. v. Murphy Textile Mills,
539 N.Y.S.2d 334, 390 (N.Y.App.Div. 1989); see also Sainty, 2008
WL 2944862, at *8 (buyer’s nine-month delay in registering a
protest concerning the untimeliness of the shipment is “plainly
unreasonable” given that “[t]he late delivery of the shipment is
not a latent defect such that [the buyer] could be excused for
failing to discover the breach in a timely manner”).
Here, more than five years elapsed between BTI’s acceptance
of the equipment and the filing of its counterclaim and answer.
Other than arguing that Niagara was aware of the untimeliness of
its delivery, BTI fails to offer any explanation for its own
unreasonable as a matter of law.
evidence that creates a genuine issue of material fact as to
whether it timely satisfied Section 2-607(3),9 BTI is barred from
Notably, in its sworn interrogatory responses, BTI
identified John Darby, Niagara’s President, as a person having
information regarding (1) Niagara’s refusal to grant the
Government “a 25% price discount in consideration of Niagara’s
delivery delays” and (2) “his statement to Mark Baldwin, in or
about the Fall of 2010, that ‘I would rather help pay your legal
costs in court than reduce my price.’” (ECF No. 21-2, Ex. 14,
BTI does not cite to this interrogatory answer in
arguing that triable issues of fact remain regarding whether BTI
satisfied Section 2-607(3).
(See generally ECF No. 22).
if BTI had done so, however, it would not have been enough to
defeat summary judgment for two reasons. First, any expression
of dissatisfaction with Niagara’s delivery by the Government is
irrelevant to determining whether BTI, as the buyer, found the
transaction to be troublesome post-acceptance – which, as
discussed above, is the critical inquiry under Section 2-607(3).
Second, although a buyer’s post-acceptance request for a price
reduction as a concession for a seller’s delivery delay
certainly could satisfy the flexible requirements for what
constitutes notice under Section 2-607(3), waiting to make such
a request until more than three years after acceptance would be
any remedies to which it otherwise might be entitled, including
any offset of the purchase price or other damages caused by
judgment as a matter of law both on its breach of contract claim
and on BTI’s counterclaim.
Niagara will be awarded $130,781.00,
representing the bargained-for purchase price of the equipment,
plus interest in the amount of $150,724.21, in accordance with
the its General Terms and Conditions of Sale (i.e., 18% per
January 18, 2007, the date when payment was due, to today).
Niagara’s Entitlement to Attorneys’ Fees
Finally, Niagara also contends that it is entitled to an
award of its reasonable attorneys’ fees by virtue of the credit
application signed by Mr. Baldwin on behalf of BTI.
unreasonable as a matter of law pursuant to the New York
precedent summarized above.
See Mount Vernon Mills, 539
N.Y.S.2d at 390 (eight-month delay unreasonable); Sainty, 2008
WL 2944862, at *8 (nine-month delay unreasonable).
Accordingly, Niagara’s alternative arguments – including
that the provision regarding delay in Niagara’s General Terms
and Conditions bars recovery of consequential damages and that
BTI has failed to offer sufficient proof to support its damages
– will not be reached.
generally ECF No. 22).
meaning that a prevailing party is not typically entitled to an
award of attorneys’ fees absent an express agreement, statute,
or court rule.
Hooper Assocs., Ltd. v. AGS Computers, Inc., 74
N.Y.2d 487, 491 (1989).
In the case of an agreement, “the court
should not infer a party’s intention to waive the benefit of the
rule unless the intention to do so is unmistakably clear from
the language of the promise.”
Id. at 492.
Whether a contract
is ambiguous typically is a question of law to be determined by
W.W.W. Assoc., Inc. v. Giancontieri, 77 N.Y.2d 157,
Here, the provision relied upon by Niagara is the sentence
in the credit application stating that “[c]ustomer agrees to pay
amounts that are placed for collection.”
(ECF No. 21-2, Ex. 7,
This provision unambiguously and unmistakably entitles
Niagara to an award of reasonable attorneys’ fees incurred in
bringing and prosecuting this lawsuit, which was instituted to
collect past due amounts owed by BTI to Niagara.
reasonableness of its requested attorneys’ fees within fourteen
(14) days and otherwise in accordance with Local Rule 109.2.
For the foregoing reasons, the motion for summary judgment
filed by Plaintiff/Counter-Defendant Niagara Transformer Corp.
will be granted.
A separate Order will follow.
DEBORAH K. CHASANOW
United States District Judge
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