Alan Skop, Inc. v. Benjamin Moore, Inc.

• Decision Date: 13 July 1990
• Docket Number: No. 1499,D,1499
• Citation: 909 F.2d 59
• Parties: ALAN SKOP, INC., Appellee, v. BENJAMIN MOORE, INC., Appellant. ocket 90-7308.
• Court: U.S. Court of Appeals — Second Circuit

Page 59

909 F.2d 59

ALAN SKOP, INC., Appellee, v. BENJAMIN MOORE, INC., Appellant.

No. 1499, Docket 90-7308.

United States Court of Appeals Second Circuit.

Argued May 14, 1990.

Decided July 13, 1990.

Joshua F. Greenberg (Richard A. De Sevo, Kaye, Scholer, Fierman, Hays & Handler, New York City, John T. Rafferty, Gen. Counsel, Benjamin Moore & Co., Montvale, N.J., of counsel), for appellant.

Howard I. Schneider, Schneider & Tratner, New York City, for appellee.

Before OAKES, Chief Judge, PRATT, Circuit Judge, and LEVAL, District Judge. ^*

PER CURIAM:

Benjamin Moore, Inc., appeals an order dated March 15, 1990, and entered March 26, 1990, of the United States District Court for the Eastern District of New York, Jack B. Weinstein, Judge, granting a preliminary injunction requiring Benjamin Moore, Inc., to continue supplying its paint products to Alan Skop, Inc., a Brooklyn retail store selling Benjamin Moore paints. We vacate the injunction and remand.

Alan Skop ¹ claims he has an oral dealership agreement with Benjamin Moore under which Benjamin Moore would supply its paint products to Skop. As discussed below, Skop has given varying explanations of the remaining terms of this purported agreement, most particularly the duration and conditions.

Skop's father, Nat Skop, had operated a Benjamin Moore dealership out of his Queens store, under an apparently similar arrangement. Nat Skop's dealership was terminated on July 12, 1989, after he had purchased without an invoice an undetermined amount of paint from a delivery driver by paying the driver cash.

Following his termination, however, Nat Skop continued to stock Benjamin Moore products. Benjamin Moore accused Alan Skop of supplying his father in violation of its policy prohibiting an authorized dealer from "transhipping" Benjamin Moore products to unauthorized dealers. Nat Skop maintained that his Benjamin Moore supply consisted of inventory left over after his termination, and of paint he later bought from another dealer whom he refused to identify but who he insisted was not his son Alan. Although Alan Skop admitted to storing some of his excess inventory both at his parents' house and his father's store, he said that he did so only because his store was too small to hold his inventory, and added that Benjamin Moore had long been aware of this practice. Benjamin Moore terminated Alan Skop's dealership on December 5, 1989.

Alan Skop filed a complaint in New York State Supreme Court on February 1, 1990, alleging breach of contract and violations of federal and state antitrust laws. He also obtained a temporary restraining order commanding that Benjamin Moore continue to supply him. Benjamin Moore then removed on diversity grounds to the district court, which held a preliminary injunction hearing on March 2, 1990. After the parties failed to agree on a settlement, the district court granted a preliminary injunction ordering Benjamin Moore to continue supplying Alan Skop, provided that Alan Skop and Nat Skop, whom the district court joined as a party, remit monies owed to Benjamin Moore within ten days, and that Nat Skop return all Benjamin Moore inventory and remove his Benjamin Moore sign from his storefront within two days.

Our jurisdiction is founded upon 28 U.S.C. Sec. 1292(a)(1) (1988), which allows appeal from an order granting an injunction. The standard for obtaining a preliminary injunction in this circuit is well established. The moving party must show (1) irreparable harm, and (2) either (a) likelihood of success on the merits or (b) a sufficiently serious question going to the merits along with the balance of hardships tilting decidedly toward the plaintiff. E.g., Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir.1979).

Even without considering the question of irreparable harm, we are compelled to find that the district court overstepped its discretion in granting the preliminary injunction. Because Skop's claim appears, at least on the record as it presently stands, so likely to fall victim to the New York statute of frauds, which the parties agree governs, he cannot establish either the likelihood of success on the merits or the sufficiently serious question going to the merits that are essential to maintain the preliminary injunction.

Skop's claim is subject to either of two provisions under the New York statute of frauds. If one were to consider his purported oral agreement with Benjamin Moore as one for a sale of goods, the New York Uniform Commercial Code, which requires that any contract for the sale of goods over $500 be in writing, N.Y. U.C.C. Law Sec. 2-201(1) (McKinney 1964), would prevent Skop from enforcing it.

Arguably, one could conceptualize the purported agreement as a dealership contract, instead of as one for the sale of goods. Nonetheless, even so conceptualized, the merits of Skop's claim still remain too speculative to support the injunction. Under New York law, an agreement which by its terms is not to be performed within one year is void if not in writing. See N.Y.Gen.Oblig.Law Sec. 5-701(a)(1) (McKinney 1989). In determining whether a dealership agreement necessarily requires more than one year for performance, we must distinguish between two facially similar dealership...