C.K.S. Ice Cream Co., Inc. v. Frusen Gladje Franchise, Inc.

• Decision Date: 04 April 1991
• Citation: C.K.S. Ice Cream Co., Inc. v. Frusen Gladje Franchise, Inc., 567 N.Y.S.2d 716, 172 A.D.2d 206 (N.Y. App. Div. 1991)
• Parties: C.K.S. ICE CREAM CO., INC., Plaintiff-Respondent, v. FRUSEN GLADJE FRANCHISE, INC., Defendant-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 716

567 N.Y.S.2d 716

172 A.D.2d 206

C.K.S. ICE CREAM CO., INC., Plaintiff-Respondent, v. FRUSEN GLADJE FRANCHISE, INC., Defendant-Appellant.

Supreme Court, Appellate Division First Department.

April 4, 1991.

Before SULLIVAN, J.P., and CARRO, WALLACH, KUPFERMAN and KASSAL, JJ.

MEMORANDUM DECISION.

Order, Supreme Court, New York County (Harold Baer, Jr., J.), entered August 29, 1990, which, inter alia, denied defendant's motion for summary judgment dismissing the complaint as to damages, and granted plaintiff's cross motion to consolidate this action with another brought by a different plaintiff against defendant to the extent of directing a joint trial, unanimously reversed, on the law, insofar as appealed from, defendant's motion granted to the extent of dismissing so much of the complaint as seeks damages for loss of future profits, plaintiff's cross motion denied, and the directive for a joint trial is vacated, without costs.

In March 1985, plaintiff, as franchisee, and defendant, as franchisor, entered into an agreement under which defendant was to supply plaintiff with all of its requirements of Frusen Gladje brand ice cream. According to plaintiff, about a year later, the quality of the ice cream began to decline, and, as a result of this and other breaches of the franchise agreement, plaintiff lost customers and went out of business in October 1987. Damages of $1.5 million are sought, most of which, plaintiff says, represent the profits it would have earned over the seven-year term of the franchise agreement had defendant continued to supply it with ice cream of the same quality as that which was supplied at first, and honored various of its other commitments under the franchise agreement.

After plaintiff had filed a note of issue and statement of readiness, defendant moved for summary judgment "as to damages", relying on plaintiff's failure to comply with court orders directing production of records showing its actual sales and expenses before and after the alleged decline in the quality of the ice cream. Without such records, defendant argued, plaintiff would not be able to show the extent of any decline in its sales, nor whether any such decline coincided with the alleged decline in the quality of the ice cream. Precluded from adducing documentary proof of its declining sales, plaintiff was, in effect, challenged by defendant's motion to disclose the data it intended to rely on instead to prove the cause and extent of its lost future profits. Purporting to meet this challenge, plaintiff's attorney responded that plaintiff would be relying on "order reports", inadvertently discarded by plaintiff but duplicates of which it knew to be in defendant's possession, showing the amount of ice cream plaintiff had purchased from defendant throughout the time it was in business. These records, plaintiff's attorney argued, would show plaintiff's consumption and supply requirements, and, as such, could serve as the "basic documentation" upon which an expert, using as a model other stores selling a similar product in a similar geographical area, might opine on the subject of profits with reasonable certainty. In a footnote to his affirmation, plaintiff's attorney explained that the reason he was not then producing an "expert's report" was because defendant had not yet produced the order reports in compliance with his demand therefor at defendant's deposition; however, he asked the court to "take notice that such an expert report can be prepared." On appeal, defendant dismisses these "order slips" as referring only to the "bulk ice cream" that plaintiff bought, not to the ice cream that plaintiff actually sold, and is therefore irrelevant to the question of damages.

IAS granted plaintiff's cross motion by directing defendant to produce its records showing the volume of ice cream it had shipped...