Re-source America, Inc. v. Corning Incorporated
DECISION AND ORDER. Plaintiffs applications [#64] [#82] are denied in their entirety. Defendants application [#86] is granted in part and denied in part as follows: The application is granted insofar as Defendant seeks a declaration that Plaintiff c annot recover contractual lost profit damages based on Defendants alleged failure to negotiate a new agreement, and insofar as Defendant seeks a declaration that the pre-judgment rate of interest on Plaintiffs contract claims would be nine percent; the application is denied insofar as Defendant seeks a declaration that pre-judgment interest on Plaintiffs equitable promissory estoppel claims would similarly be capped at nine percent.. Signed by Hon. Charles J. Siragusa on 7/21/09. (KAP)
UNITED STATES DISTRICT COURT W E S T E R N DISTRICT OF NEW YORK
R E -S O U R C E AMERICA, INC., P la in tif f , D E C IS IO N AND ORDER -vC O R N IN G INCORPORATED, D e f e n d a n ts . 0 7 -C V - 6 0 4 8 CJS
APPEARAN CES F o r Plaintiff: S te p h e n P. Pazan, Esq. S p e c to r Gadon & Rosen, P.C. 1 0 0 0 Lenola Road, P.O. Box 1001 M o o re s to w n , New Jersey 08057 R ic h a rd A. McGuirk, Esq. T e re n c e L. Robinson, Jr., Esq. VC N ix o n Peabody LLP 1 1 0 0 Clinton Square R o c h e ste r, New York 14604-1792
F o r Defendant:
IN T R O D U C T IO N T h is action arises from a business relationship between defendant Corning, Inc. ("D e f e n d a n t"), a manufacturer of optical fiber and cable, and plaintiff Re-source America, Inc. ( "P la in tif f" ), a company which refurbished packaging materials. Now before the Court are th e following motions: 1) Plaintiff's motion to file a Fourth Amended Complaint (Docket No. [# 6 4 ]); 2) Plaintiff's motion for partial summary judgment (Docket No. [#82]); and Defendant's m o tio n for partial summary judgment (Docket No. [#86]). For the reasons that follow,
P la in tiff's applications are denied, and Defendant's application is granted in part and denied in part. BACKGROUND T h e parties' business relationship existed during the period 1993 through May 31, 2 0 06 . At all relevant times, Defendant manufactured optical fiber cable, which was
p a c k a g e d on plastic spools that could be refurbished and reused. In or about 1993, Plaintiff d e v e lo p e d a patented system for refurbishing such spools and other packaging materials. S u b s e q u e n tly, the parties entered into a business arrangement, in which Plaintiff recovered u s e d packaging materials from Defendant's customers, refurbished the materials, and sold th e m back to Defendant. The plastic spools were covered with foam padding to protect the cable. As part of th e refurbishment process, Plaintiff inspected each spool, and repaired, or "re-foamed," the s p o o ls with damaged foam. However, Plaintiff's "re-foaming" process was not always e f fe c tiv e , and sometimes caused problems with Defendant's manufacturing process. E v e n tu a lly, Defendant decided not to accept re-foamed spools from Plaintiff. Defendant's d e cis io n was problematic for Plaintiff, since the foam was inspected at the end of the re fu rb is h m e n t process, after Plaintiff had already incurred the expense of cleaning the s p o o ls . Additionally, Defendant's decision caused Plaintiff to accumulate an inventory of s p o o ls with damaged foam, for which it had no use. Consequently, Plaintiff began exploring n e w "re-foaming" methods, in the hope of finding one that would be acceptable to Defendant. In 1994 Plaintiff opened a facility in Mebane, North Carolina to provide spool re fu rb is h m e n t services for Defendant's W ilm in g to n , N.C. plant. Subsequently, the parties c o n s id e re d having Plaintiff open similar refurbishing facilities in W a le s and Germany to serve
D e fe n d a n t's newly-acquired manufacturing operations in those locations. In August 2000, th e parties executed their only written agreement, covering the period August 2000 through D e c e m b e r, 2003. In relevant part, the contract contained a provision dealing with the c re a tio n of refurbishing facilities outside of the United States. That provision ("the Base L o a d in g Provision"), contained in "Attachment A" to the contract, entitled "Scope of W o rk ," s ta te s , in relevant part: R e fu rb is h m e n t plants will be located domestically and internationally as re q u ire d by Corning and as agreed to with Resource America under rules of e n g a g e m e n t and scope of work. *** B a s e Loading: A consistent volume of 30M [30,000] spools in Resource A m e r ic a 's Mebane, NC facility will be required before considering re fu rb is h m e n t in Europe, South America or Asia. In addition, a volume of 354 0 pallets consistently per week will be required to qualify for a refurbishment fa c ility in Europe, Asia, or South America. Should a refurbishment center be s ta r te d and volumes drop below required levels for a period of three (3) m o n th s , Corning will supplement the cost and make a decision if the facility s h u td o w n should occur. (D o c k e t No. [#73-3] at p. 13). The agreement contained a New York forum- selection and c h o ic e -o f- la w provision. (Agreement ¶ 14). During the term of the written agreement, at Defendant's direction Plaintiff opened re fu rb is h in g plants in W a le s and Germany. However, toward the end of 2001, the worldwide m a rk e t for Defendant's product declined sharply and unexpectedly. Instead of closing P la in tiff's plants in W a le s and Germany at that time, the parties orally agreed that Defendant w o u ld advance payments to Plaintiff to cover Plaintiff's operating costs, which Plaintiff would re p a y1 once the market for optical fiber rebounded. According to Plaintiff, the parties agreed
The parties disagree as to whether such "repaym e n t " was to be in cash or in refurbished spools. It a p p e a r s from the record that the parties originally envisioned that Plaintiff would repay the advance by p r o v id in g refurbished spools, but that over tim e , Defendant becam e dissatisfied with that arrangem e n t, since,
th a t once the market improved, Plaintiff could repay the debt incrementally by providing re fu rb is h e d spools, and that Defendant would buy enough of Plaintiff's product so that P la in tiff would be able to pay off the advances and be profitable. This oral agreement is re fe rre d to herein as the Prepaid Advance Agreement. Notably, the parties expected that th e Prepaid Advance Agreement would last only a few months, since they expected c o n s u m e r demand to rebound quickly. See, e.g., Plaintiff's Memo of Law [#92] at 8 ( "[T]he p re -p a id balance was a classic contract that was originally intended to be repaid in less than a year."); Id. at 10 ("[T]he parties originally expected the pre-paid balance to be retired only a few months after its inception."). In or about October 2001, Defendant began advancing payments to Plaintiff pursuant to the Prepaid Advance Agreement. Nevertheless, in or about December 2001, Plaintiff c lo s e d its W e ls h plant due to lack of business.2 The economic downturn lasted longer than e ith e r party anticipated, and in or about July 2002, the prepaid advance balance had grown to approximately $1.7 million. In or about August 2002, Plaintiff closed its plant in Germany.3 B y late 2002, Defendant, concerned about the size of the prepaid balance, insisted that P la in tiff begin repaying the advance incrementally. At the same time, Plaintiff sought p a ym e n ts from Defendant relating to the closure of Plaintiff's European plants. Specifically,
due to low dem a n d for product, the prepaid balance was essentially not being reduced. According to Plaintiff, the W a le s plant was opened in Decem b e r 2000, and sold no spools to D e f e n d a n t until April 2001. Plaintiff further states that although the facility began to m e e t expenses in August 2 0 0 1 , Defendant directed that the plant be closed the following m o n t h , Septem b e r 2001. (Plaintiff's Rule 56.1 A p p e n d ix [#85], Exhibit M). P la in tif f m a in ta in s that when Plaintiff's Germ a n plant opened, D e f e n d a n t did not purchase spools d u r in g the first four m o n th s of operation. Plaintiff further indicates that because of the type of spools being u s e d in G e r m a n y, and because of decisions m a d e by Defendant, Plaintiff's Germ a n plant was never s u c c e s s f u l. (Plaintiff's Rule 56.1 Appendix [#85], Exhibit M).
P la in tif f maintained that pursuant to the Base Loading Provision, Defendant owed Plaintiff m o re than eight hundred thousand dollars in connection with the failed European venture. ( P la in tiff's Rule 56.1 Appendix, Exhibit RA 25). Plaintiff proposed that such amount be a p p lie d to reduce the prepaid balance. Id. However, Defendant declined that offer, and m a in ta in e d that Defendant's claim to the prepaid balance and Plaintiff's claim to European p la n t costs were unrelated issues. Id. at Exhibit RA 33. Defendant also maintained that it h a d already satisfied any obligation that it had to supplement Plaintiff's costs associated with th e failed European venture. (See, e.g., McGuirk Affirmation [#102], Exhibit 42).4 In 2004 consumer demand for Defendant's fiber cable resumed, and Defendant s o u g h t a swift return of the remaining prepaid balance. In that regard, Plaintiff maintains, D e fe n d a n t reneged on its promise to allow Plaintiff to repay the advanced monies gradually. In s te a d , Plaintiff alleges, Defendant withheld payments on work Plaintiff performed until P la in tiff agreed to an accelerated repayment schedule. Additionally, Defendant unilaterally d e m a n d e d 13% interest on the advances. Plaintiff contends that it went along with
D e f e n d a n t's demands only because Defendant indicated that the parties' business re la tio n sh ip would continue as before once the advance was repaid. In that regard,
D e fe n d a n t allegedly also indicated that it was willing to re-consider using Plaintiff's refo a m e d spools. However, Defendant's internal documents show that Defendant had already decided n o t to continue doing business with Plaintiff. See, e.g., Plaintiff's Rule 56.1 Appendix, Exhibit
Nevertheless, as late as M a y 2004, Defendant indicated that it was willing to m a k e an additional
c o n t r ib u t io n toward Plaintiff's losses on the European venture in order to resolve the dispute. Id.
R A 34.
R A 46 ("This is a bad business relationship, [Resource America] has taken advantage of C o r n i n g and we've had to fight very hard to get to the place where we are today. Long term [R e s o u r c e America] should not be considered a viable vendor but I want to recover as much o f our money as possible first.").5 Nevertheless, Plaintiff alleges, in August 2005, Defendant to ld Plaintiff that Defendant was pleased with Plaintiff's progress on repayment, and that D e fe n d a n t "looked forward to price concessions from [Plaintiff] for 2006 in anticipation of g ro w in g volume." (Amended Complaint ¶ 74). P la in tiff finished repaying the advance, with interest, in late 2005. Immediately th e re a fte r, on March 15, 2006, during a meeting that allegedly lasted only "two minutes," D e f e n d a n t notified Plaintiff that it was terminating the parties' business relationship, effective M a y 31, 2006. (McGuirk Aff. [#86-3], Exhibit 31, Grey Deposition at p. 316). Significantly, a t that meeting, Plaintiff hoped to negotiate a new agreement, and had planned to make u n s p e c if ie d "proposals for price reduction." Id. In that regard, as mentioned above,
D e f e n d a n t had allegedly indicated, in August 2005, that in 2006 it would expect price c o n c e s s io n s from Plaintiff. On July 28, 2006, Plaintiff commenced the subject action in the United States District C o u r t for the District of New Jersey. On Defendant's motion, the New Jersey court
tra n sfe rre d the action to this Court. Upon being assigned the case, the undersigned referred a ll non-dispositive pretrial matters in the case to the Honorable Jonathan W . Feldman, U n ite d States Magistrate Judge. On April 4, 2007, Magistrate Judge Feldman issued a
Defendant's dissatisfaction with Plaintiff apparently stem m e d from various factors, including: P la in tif f 's failure to repay the prepaid advance; Plaintiff's insistence that it was owed m o n e y for the European v e n t u r e ; and Plaintiff's refusal to return spools with dam a g e d foam , which D e f e n d a n t wanted to recycle to m a k e new spools. Id. at Exhibits RA 45-46.
S c h e d u lin g Order [#28], which, inter alia, directed that "[a]ll motions . . . to amend the p le a d in g s shall be filed on or before May 1, 2007." Magistrate Judge Feldman's Order further s ta te d that "[n]o extension of the above cutoff dates will be granted except upon written a p p lica tio n , made prior to the cutoff date, showing good cause for the extension." (Emphasis in original). T h e operative pleading in this action is Plaintiff's Third Amended Complaint. The
T h ird Amended Complaint purports to state three causes of action. The first cause of action, e n title d "Breach of Contract," states a claim for breach of the parties' written agreement, and m o r e specifically, the contract's "Base Loading" provision. As to this cause of action, Plaintiff s e e ks money damages to supplement its costs relative to the operation and closing of the p la n ts in W a le s and Germany. The second cause of action, entitled "Misrepresentation, Bad Faith and Breach of Oral C o n tra c t," pleads a claim for breach of the parties' oral Prepaid Advance Agreement. The c la im alleges that as part of the oral agreement, the parties agreed that their business re la tio n s h i p would have to continue over the long term in order for Plaintiff to realize any b e n e f it from the arrangement. Plaintiff further alleges that the parties agreed that Plaintiff w o u ld "repay" the advance incrementally, once demand for Defendant's product resumed, b y providing refurbished spools to Defendant, and by applying a percentage of amounts b ille d for those spools to the prepaid balance. Furthermore, Plaintiff alleges that it intended to include "re-foamed" spools in its shipments to Defendant, to pay down the balance. P l a i n t iff contends that Defendant breached the Prepaid Advance Agreement in several re s p e cts , by: 1) accelerating Plaintiff's repayment obligation; 2) imposing thirteen-percent in te re s t on the prepaid balance; 3) frustrating Plaintiff's ability to repay the debt by refusing
to accept re-foamed spools; and 4) terminating the parties' business relationship before P la in tiff could realize the anticipated benefits of the agreement. W ith regard to the refo a m e d spools, Plaintiff alleges that Defendant acted in bad faith, because, subsequent to th e agreement, Defendant determined that it was more cost-effective for Defendant to have th e damaged spools ground up and recycled into new spools, thereby lowering Defendant's c o s t for new spools, rather than paying Plaintiff for re-foamed spools. In addition to the breach of contract claim, the second cause of action pleads a claim fo r promissory estoppel. In that regard, Plaintiff alleges that Defendant made false
s ta te m e n ts , to induce Plaintiff to accelerate repayment of the prepaid balance. Specifically, P la in tiff alleges that Defendant falsely promised that: 1) Defendant would conduct a goodfa ith review of the re-foaming process; and 2) Defendant would conduct good-faith n e g o tia tio n s for a continued business relationship with Plaintiff once the balance was re p a id .6 For damages, Plaintiff demands the return of the interest charged by Defendant, a s well as "recovery for lost profits on recycled spools that could have been refurbished, as w e ll as and [sic] reasonable expectation damages." (Third Amended Complaint ¶ 85). T h e third cause of action, entitled "Bad Faith and Intentional Business Torts," also s ta te s a claim for promissory estoppel, which is somewhat duplicative of the promissory e s to p p e l claim in the second cause of action. In that regard, the third cause of action alleges th a t Defendant promised that, in exchange for Plaintiff's accelerated repayment of the p r e p a id balance, Defendant would engage in good-faith negotiations for future business.
As the Court previously explained, "an alleged agreem e n t to negotiate in good faith at a later tim e , a s alleged here by Plaintiff, is not sufficiently definite to be enforced as a contract." (Decision and Order [#59] a t 15) (citations om itte d ) .
A s for damages, the third cause of action demands "`expectation damages' or lost profits." (T h ird Amended Complaint ¶ 99). O n April 14, 2008, Defendant answered the Third Amended Complaint. Magistrate J u d g e Feldman subsequently issued amended scheduling orders [#62, 63], directing that all d is c o v e ry relating to expert witnesses be completed by November 24, 2008, and directing th a t dispositive motions be filed by January 22, 2009. On or about July 28, 2008, Plaintiff p r o v id e d Defendant with a damages report by Plaintiff's Expert, David Smith ("Smith"). S m it h 's report included a calculation that Plaintiff had incurred damages of "about $2.0 m illio n "7 as a result of Defendant's failure to provide thirty-thousand spools per week at the M e b a n e Plant. On or about August 27, 2008, during settlement discussions, Defendant's c o u n s e l complained to Plaintiff's counsel that the aforementioned portion of Smith's report s h o u ld be stricken, since Plaintiff had not pleaded a claim for damages at the Mebane Plant. O n October 30, 2008, Defendant deposed Smith, at which time Defendant's counsel reite ra te d that Plaintiff had not pleaded a claim relating to a failure to provide thirty-thousand s p o o ls per week at the Mebane Plant. O n November 11, 2008, Plaintiff filed the subject motion [#64] for leave to file a Fourth A m e n d e d Complaint, seeking to expressly add such a claim. In that regard, the proposed F o u rth Amended Complaint is essentially identical to the prior pleading, except for changes to paragraphs 41 and 42, which are part of the first cause of action for breach of contract, a n d the "wherefore clause" for that claim. Specifically, the proposed amendments allege that
Sm ith subsequently revised that figure downward.
u n d e r the contract, Defendant was required to provide more than "10,000 [sic]8 spools per w e e k " for refurbishment at the Mebane Plant, and that the agreement required that
D e fe n d a n t "supplement [Plaintiff's] costs should volumes at the European plants drop below c e rta in levels for a period of three months or more, while maintaining volumes of 10,000 [sic] s p o o ls per week or greater at the Mebane, North Carolina plant." (Proposed Fourth A m e n d e d Complaint ¶ ¶ 41-42) (emphasis added). Additionally, the proposed amended "w h e re fo re clause," in addition to seeking "$1,727,556.62 . . . related to the closure of E u ro p e a n operations," demands "lost profits for failure to provide 10,000 spools per week a t the Mebane, North Carolina facility during European operations." Id. at ¶ 56. In support of the application to amend, Plaintiff maintains that such an application is n o t really necessary, since the Third Amended Complaint already contains a claim for d a m a g e s relative to the thirty-thousand-spool-per-week requirement: For its part, [Plaintiff] believes that, pursuant to Federal "notice pleading" s ta n d a rd s , the 30,000 spool issue had indeed properly been pleaded . . . . P la in tiff . . . does not believe that an amendment to the Third Amendment [sic] C o m p la in t is required in order to properly place the issue of damages resulting fro m Corning's failure to supply 30,000 spools per week at Mebane before the ju ry. Again, in an abundance of caution, and in order to avoid the disruption o f a motion in limine or oral objections at time of trial, [Plaintiff] submits this m o tio n now. . . . The requested amendment will require absolutely no a d d itio n a l work on the part of Corning, proposes no new causes of action, no n e w theories, and no facts that have not been discussed by the witnesses and e x p e rts of both parties at the various depositions that have taken place. ( P a z a n Affirmation [#68], ¶ ¶ 17-22). Defendant opposes the motion to amend, on three g ro u n d s : 1) Plaintiff has not shown good cause for the amendment; 2) Defendant would be
Plaintiff's counsel stated during oral argum e n t that the 10,000-spool figure, which appears repeatedly th r o u g h o u t the proposed pleading, is a typographical error, inasm u c h as the contract actually states the r e q u ir e m e n t as being 30,000 spools per week.
p re ju d ic e d by the amendment, since it adds an entirely new cause of action on the eve of the d e a d lin e for filing dispositive motions; and 3) the amendment would be futile, since the a g re e m e n t does not provide for damages relative to the thirty-thousand-spool-per-week p ro v is io n . On March 20, 2009, Plaintiff filed its subject motion for partial summary judgment [# 8 2 ], seeking, as to Plaintiff's first cause of action for breach of contract, a declaratory ju d g m e n t regarding the meaning of the contract's "Base Loading" provision, set forth above. S p e c ific a lly, Plaintiff seeks a declaration that the provision entitles Plaintiff to: 1) operating c o s ts for its plants in W a le s and Germany during any three-month period in which Defendant d id not provide at least 35-40 pallets of spools; 2) costs related to the closing of the plants; a n d 3) lost profits at the Mebane Plant resulting from Defendant's failure to provide at least th irty-th o u s a n d spools per week. According to Plaintiff, as a matter of law, the "Base L o a d in g " provision can only be interpreted to mean that once European facilities were opened a n d [Plaintiff] was extended, if volumes dropped below 35-40 pallets per week fo r a three month period, [Defendant] would supplement all the costs (defined a s actual losses) sustained by [Plaintiff] in Europe, with the supplement c a lc u la te d up to a ceiling of the minimum required 35-40 pallet volume levels, w h ile continuing to supply the 30,000 spools per week in Mebane. (P la in tif f's Memo of Law [#84] at 10) (emphasis in original; footnote omitted). Alternatively, P la in tiff maintains that even if the provision is ambiguous, that the extrinsic evidence re q u ire s judgment in Plaintiff's favor as to the meaning of the provision. Id. at 18 ("[Plaintiff's] in te rp re ta tio n . . . is supported by all the extrinsic available evidence surrounding the n e g o tia tio n of the contract.").
O n March 20, 2009, Defendant filed its subject cross-motion for partial summary ju d g m e n t [#86], seeking a determination that Plaintiff: 1) cannot recover lost profits on its p ro m is s o ry estoppel claims; and 2) cannot recover pre-judgment interest in excess of 9% a s to any of its claims. As to the promissory estoppel claims, Defendant maintains that
P la in tiff's demand for lost profits is based on the theory that, since Defendant allegedly m is le d Plaintiff into believing that the parties would negotiate a new contract, Plaintiff is e n title d to the profits that it would have earned under such a contract. Defendant contends th a t no such damages can be awarded, since the terms of such a hypothetical agreement a re speculative. (Defendant's Memo of Law [#86-3] at 1) ("[Plaintiff] now claims in Counts II and III that it should be awarded the profits it would have earned had [the parties] c o n tin u e d to do business, a new three-year contract been entered into, and had [Defendant] a llo w e d [Plaintiff] to use [plaintiff's] new production method. That is the epitome of
s p e c u la tio n and . . . New York prohibits an award of lost profits in such situations."). Plaintiff c o u n te rs that "lost profit" damages would not be speculative, since "the parties were married to each other by virtue of the `prepaid balance,' and therefore knew exactly what their future w o u ld look like, new contract or not." (Plaintiff's Memo of Law [#92] at 1).9 Plaintiff further s ta te s that lost profits would not be speculative since a "draft contract was actually produced" ye a rs earlier. Id. T h e second aspect of Defendant's partial summary judgment motion is directed at P la in tiff's demand for pre-judgment interest at a rate of 13%. Defendant contends that New Yo r k Civil Practice Law and Rules ("CPLR") § 5004 establishes a pre-judgment interest rate
This statem e n t calls to m in d a com m e n t by Plaintiff's counsel, m a d e during oral argum e n t on an e a r l ie r m o t io n in this case, that Plaintiff is entitled to "corporate alim o n y" from Defendant.
o f 9% on contract actions, and that Plaintiff therefore cannot recover more than 9% preju d g m e n t interest on its first cause of action for breach of contract. Similarly, Defendant c o n te n d s that to the extent that Plaintiff may succeed in obtaining contract damages on its p ro m is s o ry estoppel claims, that such damages would also be limited to 9% by CPLR § 5 0 0 4 . Defendant admits, though, that courts have discretion to set pre-judgment interest on c la im s of an equitable nature. In response, Plaintiff contends that "the equitable nature of its claims justifies a rate similar to that [Defendant] charged to [Plaintiff], which is 13%." (P la in tiff's Memo of Law [#92] at 2). DISCUSSION P la in tiff's Motion to File A Fourth Amended Complaint P la in tiff seeks to amend its complaint even though the court-imposed deadline for m a k in g such applications expired in 2007. The legal principles applicable to such a motion a r e clear: P u r s u a n t to Rule 15(a)(2) of the Federal Rules of Civil Procedure, a court s h o u ld freely give leave to amend when justice so requires. . . . Generally, a d is tric t court has discretion to deny leave for good reason, including futility, b a d faith, undue delay, or undue prejudice to the opposing party. W h e re , as h e re , a scheduling order governs amendments to the complaint, see F e d .R .C iv .P . 16(b)(4) ("A schedule may be modified only for good cause and w ith the judge's consent."), the lenient standard under Rule 15(a), which p ro v id e s leave to amend shall be freely given, must be balanced against the re q u ire m e n t under Rule 16(b) that the Court's scheduling order shall not be m o d ifie d except upon a showing of good cause. W h e th e r good cause exists tu rn s on the diligence of the moving party. H o lm e s v. Grubman, -- F.3d --, 2009 W L 1531964 at *4 (2d Cir. Jun. 3, 2009) (citations and in te rn a l quotation marks omitted).
H e re , the Court finds that Plaintiff has not shown good cause for the late application. In that regard, Plaintiff initially did not attempt to show good cause, and instead, argued that th e proposed amendments were not substantive. The Court, though, disagrees and finds th a t the proposed amendments raise an entirely new theory of recovery. Alternatively, P la in tiff indicates that it did not assert the claim sooner, because it could not quantify the d a m a g e s until it received its expert's report. (See, Plaintiff's Memo of Law [#65] at 3) ("It was a rg u a b l y not until the loss expert David Smith completed his report on July 28, 2008 that [P la in tiff] had a number to attach to the loss associated with the failure to provide 30,000 s p o o ls per week at Mebane."). However, as Plaintiff has argued throughout this case, the fe d e ra l rules provide for notice pleading, and Plaintiff could have asserted the proposed a m e n d e d claim without regard to a specific damage estimate. In any event, the proposed F o u rth Amended Complaint does not assert a specific dollar amount for this new claim, but in s te a d , demands only "lost profits for failure to provide 10,000 [sic] spools per week at the M e b a n e , North Carolina facility during European operations." (Proposed Fourth Amended C o m p la in t ¶ 56). Accordingly, the Court finds that Plaintiff's explanation for failing to assert th e claim sooner does not amount to good cause, and that Plaintiff was not diligent in a s s e rtin g the proposed claim. The Court also finds that the proposed amendment would p re ju d ic e Defendant, since the Court would need to reopen discovery, which would further d e la y the resolution of the case. Having performed the balancing described above, the Court d e n ie s the motion to amend. Since the Court finds that the motion must be denied for the r e a so n s already stated, the Court does not reach Defendant's alternative argument re g a rd in g futility of the amendment.
Plaintiff's Motion for Partial Summary Judgment P la in tiff seeks partial summary judgment on the first cause of action, concerning the m e a n in g of the Base Loading Provision. Specifically, Plaintiff asks the Court to declare, as a matter of law, that the Base Loading provision "means that [Defendant] is responsible for s u p p le m e n tin g the operating losses arising from the shortfalls in stated minimum volume le v e ls in Europe . . . [and] for lost profits in the US, and also requires [Defendant] to s u p p le m e n t [Plaintiff's] shut down costs in Europe." (Plaintiff's Memo of Law [#84] at 1).
The standard for granting summary judgment is well established.
judgment may not be granted unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A party seeking summary judgment bears the burden of establishing that no genuine issue of material fact exists. See, Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). "[T]he movant must make a prima facie showing that the standard for obtaining summary judgment has been satisfied." 11 MO O R E'S FEDERAL PRACTICE, § 56.11[a] (Matthew Bender 3d ed.). "In moving for summary judgment against a party who will bear the ultimate burden of proof at trial, the movant may satisfy this burden by pointing to an absence of evidence to support an essential element of the nonmoving party's claim." Gummo v. Village of Depew, 75 F.3d 98, 107 (2d Cir. 1996)(citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)), cert denied, 517 U.S. 1190 (1996).
The burden then shifts to the non-moving party to demonstrate "specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). To do this, the non-moving party must present evidence sufficient to support a jury verdict in its favor. Anderson, 477 U.S. at 249; see also, FED. R. CIV. P. 56(e)("When a motion for summary judgment is made and supported as provided in this rule, and adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial."). The underlying facts contained in affidavits, attached exhibits, and depositions, must be viewed in the light most favorable to the non-moving party. U.S. v. Diebold, Inc., 369 U.S. 654, 655 (1962). Summary judgment is appropriate only where, "after drawing all reasonable inferences in favor of the party against whom summary judgment is sought, no reasonable trier of fact could find in favor of the non-moving party." Leon v. Murphy, 988 F.2d 303, 308 (2d Cir.1993). The parties may only carry their respective burdens by producing evidentiary proof in admissible form. FED. R. CIV. P. 56(e).
A t the outset, based on the Court's earlier discussion, Plaintiff has no claim for lost p ro fits at the Mebane Plant in this action. Accordingly, Plaintiff's motion is moot to the extent th a t it seeks a declaration as to rights to "lost profits in the US."10 As for the remainder of P la in tiff's motion, the Base Loading provision does not specifically refer to "shut down costs," a n d the parties disagree as to whether they intended to provide for such costs. Similarly, the
If the claim were not m o o t, Plaintiff would still not be entitled to sum m a r y judgm e n t, since the Base L o a d in g Provision m a k e s no m e n tio n of "lost profits," and the parties disagree as to whether the provision was in t e n d e d to provide for any paym e n t to Plaintiff relative to the thirty-thousand-spool-per-week term .
p a rtie s disagree as to meaning of the term "supplement." Accordingly, the Court finds that th e re are triable issues of fact concerning the meaning of the Base Loading Provision. P la in tiff's application for partial summary judgment is therefore denied. D e fe n d a n t's Motion for Partial Summary Judgment D e fe n d a n t seeks partial summary judgment on Plaintiff's promissory estoppel claims in the second and third causes of action. Specifically, Defendant seeks a declaration that P la in tiff cannot recover profits that Plaintiff believes it would have earned if the parties had n e g o tia te d a new contract, including an agreement to use re-foamed spools, and had c o n tin u e d to do business after repayment of the prepaid balance, since such damages would b e speculative.11 In response, Plaintiff maintains that its demand for "lost profits" is "not s p e c u la tive at all." (Plaintiff's Memo of Law [#92] at 1). The Court agrees with Defendant, a n d finds that Plaintiff cannot recover "lost profits" that it might have earned if the parties had a c tu a lly negotiated a new agreement following the repayment of the prepaid advance. A rc a d ia n Phosphates, Inc. v. Arcadian Corp., 884 F.2d 69, 74 n. 2 (2d Cir. 1989) ("Here, [d e fe n d a n t's ] alleged failure to bargain in good faith is not a but-for cause of [plaintiff's] lost p r o f its , since even with the best faith on both sides the deal might not have been closed."); G o o d s te in Const. Corp. v. City of New York, 80 N.Y.2d 366, 373, 590 N.Y.S.2d 425 (1992) ("[A ] party's alleged failure to bargain in good faith is not a but-for cause of plaintiff's lost p ro fits , since even with the best faith on both sides the deal might not have been closed and a ttrib u tin g plaintiff's lost profits to defendant's bad faith may be speculative at best.") (citation
Alternatively, Defendant contends that, since the agreem e n t that Plaintiff sought but did not obtain, f o llo w in g repaym e n t of the advance, was to be a m u lti- ye a r deal, it would be barred by the statute of frauds. I n response, Plaintiff discusses the Prepaid Advance Agreem e n t , but does not address Defendant's argum e n t . ( P la in t if f 's Mem o of Law [#92] at 1-2, 8-10).
a n d internal quotation marks omitted). In that regard, it is clear that there was never a m e e tin g of the minds regarding a new agreement, including any agreement regarding new r e - f o a m in g methods. Consequently, Plaintiff cannot recover "lost profits" on its promissory e s to p p e l claims. D e f e n d a n t also seeks a declaration that Plaintiff cannot recover pre-judgment interest in excess of 9% on any of its claims. On this point, Defendant argues that Plaintiff is e s s e n tia lly seeking contractual expectation damages on all of its claims, including the p ro m is s o ry estoppel claims. (Defendant's Memo of Law [#86-3] at 22-23). Plaintiff responds th a t courts have discretion to set pre-judgment interest in equitable cases. (Plaintiff's Memo o f Law [#92] at 20). It is clear that in New York, the rate of pre-judgment interest is nine percent per a n n u m , CPLR § 5004, "except that in an action of an equitable nature, interest and the rate a n d date from which it shall be computed shall be in the court's discretion." CPLR § 5001(a). H e re , there does not appear to be any dispute that the pre-judgment interest rate on P la in tiff's claims for breach of contract would be nine percent. The dispute is with regard to P la in tiff's promissory estoppel claims, and as to those, Defendant argues that, although the c la im s are "equitable in nature, they seek damages that are legal in nature, lost profits." (D e fe n d a n t's Reply Memo [#109] at 10). However, as discussed above, Plaintiff cannot re c o v e r contractual lost-profit expectation damages on its promissory estoppel claims. T h e re fo re , any damages that Plaintiff may recover on its promissory estoppel claims would b e equitable in nature, and the Court would have discretion to set the pre-judgment interest ra te .
C O N C L U S IO N P la in tiff's applications [#64] [#82] are denied in their entirety. Defendant's application [# 8 6 ] is granted in part and denied in part as follows: The application is granted insofar as D e fe n d a n t seeks a declaration that Plaintiff cannot recover contractual "lost profit" damages b a se d on Defendant's alleged failure to negotiate a new agreement, and insofar as D e f e n d a n t seeks a declaration that the pre-judgment rate of interest on Plaintiff's contract c la im s would be nine percent; the application is denied insofar as Defendant seeks a d e c la ra tio n that pre-judgment interest on Plaintiff's equitable promissory estoppel claims w o u ld similarly be capped at nine percent. S O ORDERED. D a te d : J u ly 21, 2009 R o c h e s te r , New York EN TER :
/s / Charles J. Siragusa CHARLES J. SIRAGUSA U n ite d States District Judge
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