Badalament v. Mel-O-Ripe Banana Brands, Ltd.

Decision Date29 June 2001
Docket NumberNo. 00-CV-74085-DT.,00-CV-74085-DT.
Citation265 BR 732
PartiesBADALAMENT, INC., Plaintiff, v. MEL-O-RIPE BANANA BRANDS, LTD. and Carmine Pitoscia, Defendants.
CourtU.S. District Court — Western District of Michigan

Daniel J. McGlynn, Eric R. Swanson, Duffy & Robertson, Bloomfield Hills, MI, for Badalament, Incorporated, plaintiffs.

Gerard V. Mantese, Martha J. Olijnyk, Mantese, Miller, Troy, MI, for Mel-O-Ripe Banana Brands, Ltd., Carmine Pitoscia, defendants.


HOOD, District Judge.


On October 10, 2000, Plaintiff filed the instant action against Defendants Mel-O-Ripe Banana Brands, Ltd. and Carmine Pitoscia alleging four counts: Breach of Contract (Count I), Account Stated (Count II), Unjust Enrichment (Count III), and Quantum Meruit (Count IV). Defendants filed their Answer and Affirmative Defenses on October 31, 2000, amended on November 13, 2000. Defendant Mel-O-Ripe filed Proposal in Bankruptcy under the laws of Canada, staying the suit against Defendant Mel-O-Ripe. Plaintiff claims that Defendant Pitoscia admitted certain allegations in the Answer which establish Plaintiff's breach of contract claim, and, therefore, there are no genuine issues as to any material fact for trial. Plaintiff has now filed the instant motion against Defendant Pitoscia only.

In response, Defendant Pitoscia claims that for over 35 years, two generations of families, the Pitoscias and the Badalaments, have been doing business together in the wholesale product market. Plaintiff Badalament is a Detroit close corporation and Defendant Mel-O-Ripe is a Toronto company. Beginning in 1998, Mel-O-Ripe started to purchase bananas heavily from Badalament in an effort to lower costs. Defendants claim that Badalament was eager to increase its market share that it began to sell its goods to Mel-O-Ripe's competitors at lower prices which resulted in Mel-O-Ripe to lower its prices to compete, losing profits. Badalament accumulated about $550,000 in payable from Mel-O-Ripe which Mel-O-Ripe paid half of the amount in 1999. Defendants claim Badalament was well aware of Mel-O-Ripe's financial problems in 1999. Defendant Pitoscia had numerous conversations with the Badalaments about the problem. Badalament continued to encourage Mel-O-Ripe to buy from Badalament. As a result of Badalament's continued to sales to Mel-O-Ripe at prices higher than sales to Mel-O-Ripe's competitors, Mel-O-Ripe's financial situation did not improve. Mel-O-Ripe was forced to sell some of its warehouses and other assets. In the Fall of 1999, Mel-O-Ripe realized Badalament was dumping its bananas with Mel-O-Ripe's competitors. Badalament began demanding full payment of all open invoices, contrary to Badalament's promises to work with Mel-O-Ripe. Negotiations were held but an agreement could not be negotiated. Mel-O-Ripe was forced to file bankruptcy in Canada and it is in the process of restructuring and negotiating with its creditors, including Plaintiff.

A. Standard of Review

Rule 12(b)(6) provides for a motion to dismiss for failure to state a claim upon which relief can be granted. This type of motion tests the legal sufficiency of the plaintiff's Complaint. Davey v. Tomlinson, 627 F.Supp. 1458, 1463 (E.D.Mich. 1986). In evaluating the propriety of dismissal under Rule 12(b)(6), the factual allegations in the Complaint must be treated as true. Janan v. Trammell, 785 F.2d 557, 558 (6th Cir.1986). If matters outside the pleading are presented in a Rule 12(b)(6) motion, the motion shall be treated as one for summary judgment under Rule 56(b) and disposed of as provided in Rule 56.

Rule 56(c) provides that summary judgment should be entered only where "the pleadings, depositions, answers to the interrogatories, and admissions on file, together with 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." The presence of factual disputes will preclude granting of summary judgment only if the disputes are genuine and concern material facts. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute about a material fact is "genuine" only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. Although the Court must view the motion in the light most favorable to the nonmoving party, where "the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment must be entered against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be "no genuine issue as to any material fact," since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. Celotex Corp., 477 U.S. at 322-23, 106 S.Ct. 2548. A court must look to the substantive law to identify which facts are material. Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

B. Breach of Contract/Account Stated

A plaintiff must establish the following to state a breach of contract claim: 1) that the parties entered into a valid enforceable contract that included the terms and conditions claimed by plaintiff; 2) that the defendant breached the contract; and, 3) that the defendant's breach caused a loss to the plaintiff. Platsis v. E.F. Hutton & Co., 642 F.Supp. 1277 (W.D.Mich.1986); Pittsburgh Tube Co. v. Tri-Bend, Inc., 185 Mich.App. 581, 463 N.W.2d 161 (1990).

MCLA 600.2145 provides that if the plaintiff or someone in his behalf makes an affidavit of the amount due, filing an affidavit and account on defendant with the complaint, such affidavit shall be deemed prima facie evidence of such indebtedness unless the defendant with his answer or by an agent, makes an affidavit and serves a copy thereof on the plaintiff denying the same.

Plaintiff claims that Defendant has failed to file a counter-affidavit as to the account stated. In response, Defendant has properly answer Plaintiff's claim for account stated by denying such a claim in its Answer and its First Amended Answer. Defendant further claims that Plaintiff did not comply with MCLA 600.2145 since Plaintiff did not file a copy of the account with its complaint and no affidavit was filed with the amount due with its complaint. The Complaint was not a verified complaint, therefore, it could not state a prima facie evidence of an account stated. Defendant further argues that discovery has not began, let alone completed, therefore, Defendant has not had an opportunity to discover any facts relating to the Complaint or Defendant's affirmative defenses.

A review of the Complaint shows that no affidavit has been filed as to the amount due on the account as required by MCLA 600.2145. The Complaint, as claimed by Defendant, is not a verified complaint. Defendant properly rebutted Plaintiff's Complaint as to the account stated in the Answer and Affirmative Defenses, and the amended Answer and Affirmative Defenses by denying the claim. There are questions of fact as to the Account Stated. Additionally, Defendant Pitoscia has denied the personal guarantee is enforceable against him. Defendant has stated affirmative defenses of fraud, misrepresentations, economic duress, lack of mutual assent, estoppel, the contract is void or voidable, accord and satisfaction, waiver, failure to exhaust available remedies under MCLA 600.2952 and the personal guaranty is unenforceable. Finally, Defendant has not had the opportunity to depose of the Badalaments regarding the misrepresentations to Pitoscia. Lack of discovery makes dispositive motion premature. Defendant claims his defenses, such as fraudulent inducement, are essentially an issue of fact to which discovery is needed. See Williams v. Garcia, 569 F.Supp. 1452, 1455 (E.D.Mich.1983); Comstock v. Potter, 202 Mich. 681, 687, 168 N.W. 994 (1918); Cole Lakes, Inc. v. Linder, 99 Mich.App. 496, 504, 297 N.W.2d 918 (1980). Summary judgment is premature at this time. The Plaintiff's motion was filed on February 6, 2001, on the day of the scheduling conference and before discovery began.

C. Motion to Stay
1. Defendant Mel-O-Ripe

Plaintiff filed the instant suit against Defendants in September 2000. On October 4, 2000, Defendant Mel-O-Ripe only filed a Notice of Intention to File a Proposal in Bankruptcy in the Ontario Division of the Official Receiver. The Proposal was filed on November 2, 2000 in the Ontario Superior Court of Justice in Bankruptcy. Both Defendants seek a stay of the proceedings claiming that if the Canadian Court makes its determination on the Proposal then the debt at issue will be discharged and a significant part of the action will become moot.

The main issue is whether the United States federal courts recognize the bankruptcy action in Canada and stay the proceedings. Defendants claim that the Canadian Bankruptcy action is a reorganization action, similar to Chapter 11 proceedings in the United States.

A federal court has discretion to exercise its inherent power to stay the proceedings before it. Landis v. North American Co., 299 U.S. 248, 57 S.Ct. 163, 81 L.Ed. 153 (1936). Under the principle of international comity, a federal court should give effect to executive, legislative, or judicial acts of another nation. See Philadelphia Gear Corp. v. Philadelphia Gear de Mexico, 44 F.3d 187, 191 (3d Cir.1994). Comity is the "recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another...

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