Clopay Plastic Prods. Co. v. Excelsior Packaging Grp., Inc.

• Court: U.S. District Court — Southern District of New York
• Writing for the Court: J. PAUL OETKEN, District Judge
• Decision Date: 18 September 2014
• Docket Number: 12-CV-5262 (JPO)
• Citation: Clopay Plastic Prods. Co. v. Excelsior Packaging Grp., Inc., 12-CV-5262 (JPO) (S.D. N.Y. Sep 18, 2014)
• Parties: CLOPAY PLASTIC PRODUCTS COMPANY, INC., Plaintiff, v. THE EXCELSIOR PACKAGING GROUP, INC., Defendant-Third-Party Plaintiff, v. KIMBERLY-CLARK CORPORATION, Third-Party Defendant.

CLOPAY PLASTIC PRODUCTS COMPANY, INC., Plaintiff, v. THE EXCELSIOR PACKAGING GROUP, INC., Defendant-Third-Party Plaintiff, v. KIMBERLY-CLARK CORPORATION, Third-Party Defendant.

12-CV-5262 (JPO)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

September 18, 2014

OPINION AND ORDER

J. PAUL OETKEN, District Judge:

Plaintiff Clopay Plastic Products Company, Inc. ("Clopay") brought this action for breach of contract and related claims against Defendant The Excelsior Packaging Group, Inc. ("Excelsior") for failing to pay for materials used to make Huggies brand diapers. Excelsior impleaded the manufacturer and distributor of Huggies, Kimberly-Clark Corporation ("Kimberly-Clark"), and its affiliate, Hogla-Kimberly Ltd. ("Hogla-Kimberly"), and asserted counterclaims for overpayment, accounts stated, and breach of warranty. Clopay now moves for summary judgment on its claims and Excelsior's counterclaims. For the reasons that follow, Clopay's motion is granted.

I. Background

A. Factual Background¹

This dispute arises out of a business relationship involving Clopay, Excelsior, Kimberly-Clark, and Hogla-Kimberly. Kimberly-Clark and its joint venture affiliate, Hogla-Kimberly, manufacture and distribute Huggies brand diapers. Excelsior is a commercial printing business that imprints plastic films and laminates. Since 2006, a portion of its business has been imprinting Microflex embossed plastic film laminate—a material used to make Huggies diapers ("the material")—with Kimberly-Clark's graphics. Ordinarily, Kimberly-Clark and its affiliates produced the material and provided it to Excelsior, which performed imprinting and conversion and then sent it back to Kimberly-Clark for finishing, distribution, and sale. In early 2007, however, due to a shortage of supply of material provided by Kimberly-Clark, Excelsior began ordering material from Clopay, a manufacturer of laminates and a longtime supplier for Kimberly-Clark.

Excelsior initiated each transaction by sending Clopay a purchase order specifying the amount of material desired and the location for delivery. Clopay then sent the material to the requested location and mailed an invoice to Excelsior's headquarters in Yonkers, New York. The back of each invoice contained Clopay's terms and conditions of sale. (See Dkt. No. 59 ("Minshall Decl."), Ex. 2 ("Terms and Conditions")). In a paragraph labeled "Warranties," the Terms and Conditions provided:

(a) Seller warrants only that the goods shipped hereunder will meet the specifications set forth on the reverse hereof. . . . THE WARRANTY OF THE SPECIFICATIONS OF THE GOODS IS MADE BY THE SELLER IN LIEU OF ANY OTHER WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUTNOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, OF FITNESS FOR A PARTICULAR PURPOSE, OR BY SAMPLE. . . . (b) Buyer's claims under paragraph [4](a) must be made in writing and delivered to Seller within 30 days after receipt by Buyer of the first shipment of goods as to which a claim is made. No claim will be allowed if the required notice is not received by Seller within the 30 day period.

Terms and Conditions ¶ 4. In a paragraph labeled "Acceptance and Entire Agreement," the Terms and Conditions further provided:

SELLER'S ACCEPTANCE OF BUYER'S ORDER IS EXPRESSLY MADE CONDITIONAL ON ASSENT TO THESE CONDITIONS OF SALE. . . . IF BUYER DOES NOT ACCEPT THESE CONDITIONS BUYER MUST NOTIFY SELLER IN WRITING WITHIN FIVE DAYS OF BUYER'S RECEIPT HEREOF AND RETURN ANY GOODS RECEIVED IMMEDIATELY OR BUYER WILL BE DEEMED TO HAVE ASSENTED TO THESE CONDITIONS.

(Id. ¶ 8.) The terms and conditions also provided for a "1 ½% per month late charge on all invoices past due more than 60 days." (Id. ¶ 2.)

Clopay characterizes its relationship with Excelsior as rocky from the start, marked by frequent late payments and overdue balances that at times exceeded $1 million. Although Clopay considered terminating the arrangement and commencing litigation in late 2008 and early 2009, it opted not to do so, especially because of its independent relationship with Kimberly-Clark, which was in need of the material processed by Excelsior. In late 2009, however, the first shortage of supply of laminate material ended, and Clopay refused to sell to Excelsior until it satisfied its outstanding balance. At this time, Excelsior owed $675,629.01 for unpaid invoices dated January 5 through August 25, 2009 (the "2009 invoices").

In April 2010, due to another shortage of supply of the material, Clopay began again selling material to Excelsior, but agreed to do so only on a cash-in-advance basis. Because it was impossible to match the amount of material shipped with the amount of cash advanced, eachshipment resulted in a credit or debit balance that was set forth in subsequent invoices (the "2010 invoices"). As a result of these transactions, Excelsior accrued an additional balance of $16,944.12.

It is undisputed that the two sets of invoices underlying this suit have a total combined balance of $692,573.13. Excelsior's president, Ronnie Shemesh, claims that Excelsior did not pay because "[s]ubstantially all of the material shipped by Clopay failed to comply with the specifications therefor and caused enormous processing delays, overtime, waste of raw materials and difficulties in imprinting, conversion[,] and manufacturing by Excelsior, including damage to Excelsior's equipment." (Dkt. No. 67 ("Shemesh Decl.") ¶ 9.) Excelsior also asserts that it did not "accept" the material, but rather "retained the same under protest" because "it would have been pointless for Excelsior to return this single-use material to Clopay, and Clopay was aware of the problems in converting the Laminate." (See, e.g., Dkt. No. 68 ("Def.'s 56.1") ¶¶ 6, 7.) Shemesh states that during this time, there was "frequent and direct contact," including by e-mail, between the two companies "with regard to the defective material Clopay had shipped to Excelsior," and that "at all times [Clopay] had full knowledge of the defects." (Shemesh Decl. ¶ 10.) However, Excelsior admits that it did not make any claims with regard to this material in the manner required by the provisions of the Terms and Conditions. (See Def.'s 56.1 ¶ 81.)

Clopay sent Excelsior statements of account on June 30, 2011, and February 27 and June 30, 2012, which reflected the $692,573.13 due under the combined 2009 and 2010 invoices. (Minshall Decl. Ex. 7.) Excelsior received these and admits that it did not object to the statements. (Def.'s 56.1 ¶¶ 83-85.)

According to Excelsior, Clopay determined in 2010 that "it would not collect for the defective material previously shipped to Excelsior," and decided to "wr[i]te off substantially all of the receivable balance purported to be due in this action." (Shemesh Decl. ¶ 12.) Excelsioralso claims that Clopay "notified Excelsior in writing that Excelsior had no remaining balance due." (Id. ¶ 13.) Clopay disputes these assertions. (Dkt. No. 72 ("Second Minshall Decl.") ¶¶ 2-12.)

B. Procedural Background

Clopay filed this suit in July 2012, asserting claims for breach of contract, goods sold and delivered, accounts stated, unjust enrichment, and breach of contract for late charges, seeking damages totaling $1,180,690.12. (Compl.) Excelsior filed a motion to dismiss Clopay's unjust enrichment claim on August 21, 2012 (Dkt. Nos. 8-9), which was denied on October 29, 2012 (Dkt. No. 17). On December 7, 2012, Excelsior filed its answer and asserted counterclaims for overpayment and accounts stated, seeking damages of $248,048.09, and for breach of warranty, seeking damages of $1,000,000. (Dkt. No. 20.) Clopay filed a reply to counterclaims on December 21, 2012. (Dkt. No. 22.) Excelsior then filed a third-party complaint against Kimberly-Clark and Hogla-Kimberly on January 31, 2013. (TP Compl.) Kimberly-Clark moved to dismiss on April 15, 2013 (Dkt. No. 29), and Clopay moved to sever the third-party claims from the underlying lawsuit on July 1, 2013 (Dkt. No. 43). Those motions were denied on December 6, 2013. (Dkt. No. 55.) Third-party defendant Hogla-Kimberly filed a motion to dismiss for lack of personal jurisdiction on February 14, 2014 (Dkt. No. 76), and that motion was granted on September 11, 2014 (Dkt. No. 88).

Now before the Court is Clopay's motion for summary judgment, filed December 6, 2013. (Dkt. No. 56.) Clopay seeks judgment as a matter of law on its claims against Excelsior for payment of outstanding balances on the 2009 and 2010 invoices, along with interest. Clopay also seeks judgment in its favor on Excelsior's counterclaims.

II. Legal Standard

Summary judgment is proper when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact is material if it "might affect the outcome of the suit under the governing law," Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986), and a dispute is genuine if, considering the record as a whole, a rational jury could find in favor of the non-moving party, Ricci v. DeStefano, 557 U.S. 557, 586 (2009) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).

On a motion for summary judgment, the party bearing the burden of proof at trial must come forward with evidence on each element of its claim or defense illustrating its entitlement to relief. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). It cannot rely upon mere "conclusory statements, conjecture, or speculation" to meet its burden. Kulak v. City of New York, 88 F.3d 63, 71 (2d Cir. 1996). If the party with the burden of proof makes the requisite initial showing, the burden shifts to the opposing party to identify specific facts demonstrating a genuine issue for trial, i.e., that reasonable jurors could differ about the evidence. Fed. R. Civ. P. 56(c); Liberty Lobby, 477 U.S. at 250-51. The court should view all evidence "in the light most favorable to the nonmoving party and draw all reasonable inferences in its...