Cosy Goose Hellas v. Cosy Goose Usa. Ltd.

• Decision Date: 03 October 2008
• Docket Number: No. 06 Civ. 4363(SCR)(LMS).,06 Civ. 4363(SCR)(LMS).
• Citation: 581 F.Supp.2d 606
• Parties: COSY GOOSE HELLAS, Aristotelis Diktopoulos, CHR Diktopoulos SA, Tsitsivas Bros., Plaintiffs, v. COSY GOOSE USA, LTD., Laurevan Shoe Corp., Paul Weitman, Defendants.
• Court: U.S. District Court — Southern District of New York

581 F.Supp.2d 606

COSY GOOSE HELLAS, Aristotelis Diktopoulos, CHR Diktopoulos SA, Tsitsivas Bros., Plaintiffs, v. COSY GOOSE USA, LTD., Laurevan Shoe Corp., Paul Weitman, Defendants.

No. 06 Civ. 4363(SCR)(LMS).

United States District Court, S.D. New York.

October 3, 2008.

David Douglas Jensen, John C. Koster, Jack A. Greenbaum, Blank Rome LLP, New York, NY, for Plaintiffs.

Ronald Alan Sher, Marc Howard Fryburg, Himmelfarb & Sher, LLP, White Plains, NY, for Defendants.

DECISION AND ORDER

LISA MARGARET SMITH, United States Magistrate Judge.

Plaintiffs Cosy Goose Hellas, Artistotelis Diktopoulos, CHR Diktopoulos SA, and Tsitsivas Bros. (herein, "Plaintiffs") and Defendants Paul Weitman and Laurevan Shoe Corp. (herein, "Defendants") have filed cross motions for summary judgment seeking a judicial determination as to whether there exists a joint venture between two or more of the parties to this action. See Docket # 69, Defendants' Notice of Motion; Docket # 73, Plaintiffs' Notice of Motion. Defendants maintain that there exists no such joint venture and that the claims asserted by the Plaintiffs predicated upon the existence of such a fiduciary relationship should be dismissed; Plaintiffs maintain that such a fiduciary duty exists between the parties, that there is no genuine issue of material fact in dispute as to the formation and existence of the joint venture, and that the claims based upon the existence of the joint venture should proceed to trial. Separately, Defendant Cosy Goose USA, Ltd. (herein, "Cosy Goose USA"), which has not joined in the branch of the Defendants' motion challenging the existence of a joint venture, has moved for summary judgment in its favor on one of its counter-claims against Plaintiff Diktopoulos SA sounding in breach of warranty of merchantability, see Docket # 69, Defendants' Notice of Motion at ¶ 2 (seeking "partial summary judgment, on liability, on the First Counterclaim"), and Plaintiffs have moved for summary judgment in their favor on their alternative claim of unjust enrichment and restitution against the Defendants, see Docket # 73, Plaintiffs' Notice of Motion.

The parties have again consented to the jurisdiction of the undersigned for the limited purpose of rendering a decision on the instant dispositive motions pursuant to 28 U.S.C. § 636(c)(1).¹ See Docket # 72, Consent to United States Magistrate Judge for Dispositive Motion. For the following reasons Defendants Weitman and Laurevan's motion for summary judgment seeking dismissal of the joint venture allegations is granted, Plaintiffs' cross-motion for summary judgment seeking confirmation of a joint venture is denied, Defendant Cosy Goose USA's motion for summary judgment in its favor on its counterclaim sounding in breach of warranty is denied, and Plaintiffs' motion for summary judgment on their claim of unjust enrichment and restitution is denied without prejudice to renew within forty-five days of today's date.

BACKGROUND

A. Facts

The following facts are taken from the parties' recitations of undisputed material facts filed pursuant to Local Rule 56.1. See Docket # 69, Defendants' Notice of Motion, S.D.N.Y. Local Rule 56.1 Statement (herein, "Defs' 56.1 Statement"); Docket # 76, Plaintiffs' Rule 56.1 Statement (herein, "Pls' 56.1 Statement"). The following facts are undisputed and are assumed to be true for the purposes of these motions unless otherwise noted.

Defendant Paul Weitman is the president and sole shareholder of Defendant Laurevan Shoe Corporation, a closely held corporation organized under the laws of the State of New York. See Pls' 56.1 Statement at ¶¶ 18, 19. Mr. Weitman began Laurevan's business in 1985, which presently includes "import[ing], distribut[ing] and market[ing] shoes and other footwear, primarily in the United States ... through its network of approximately 1,000 shoe and footwear retailers...." See Docket # 69, Notice of Motion, Affidavit of Paul Weitman (herein, "Weitman Aff.") at ¶ 4. Among the shoes marketed and sold by Laurevan are "Eric Michael" brand shoes. See Pls' 56.1 Statement at ¶ 20. "Eric Michael" brand shoes were originally manufactured by Plaintiff CHR Diktopoulos SA, a Greek corporation that is owned and operated by Plaintiff Aristotelis Diktopoulos and his family in Greece. See Pls' 56.1 Statement at ¶¶ 16, 20; Defs' 56.1 Statement at ¶ 1.² Mr. Weitman, through Laurevan, began purchasing "Eric Michael" shoes from Plaintiff Diktopoulos SA in 2000. See Pls' 56.1 Statement at ¶ 20; Defs' 56.1 Statement at ¶ 1.

In June of 2003 Mr. Diktopoulos and Mr. Weitman attended a trade show in Italy "where they discussed a possible business arrangement whereby Cosy Goose brand shoes manufactured by Diktopoulos SA would be imported and marketed in the United States." See Defs' 56.1 Statement at ¶ 4. The parties' discussion about their prospective business arrangement continued at Laurevan Shoe Corp.'s corporate offices in White Plains, New York later that month. See Defs' 56.1 Statement at ¶ 5. The business arrangement between Mr. Diktopoulos and Mr. Weitman envisioned Mr. Weitman organizing a new corporation, Cosy Goose USA, Ltd., "to import, distribute and market Cosy Goose brand shoes in the United States." See Defs' 56.1 Statement at ¶ 6. In furtherance of this agreement, Mr. Diktopoulos agreed to advance the money needed to start up the Cosy Goose USA business and to cover its initial expenses, see Defs' 56.1 Statement at ¶ 9, and Mr. Weitman agreed to run the daily operations of Cosy Goose USA, see Pls' 56.1 Statement at ¶ 48. The parties agreed that Mr. Weitman would receive an annual salary of $50,000 from Cosy Goose, USA, as compensation for overseeing and managing Cosy Goose USA, and that Laurevan would receive an eight percent commission on all Cosy Goose shoe sales. See Defs' 56.1 Statement at ¶¶ 7, 8. The agreement between the parties provided that Laurevan would receive commissions on all Cosy Goose shoe sales in exchange for Laurevan providing certain services and courtesies to Cosy Goose USA, including allowing Cosy Goose USA to operate out of Laurevan's business office, having Laurevan employees perform work for Cosy Goose USA, and marketing and selling the Cosy Goose brand shoes through Mr. Weitman and Laurevan's network of shoe retailers. See Pls' 56.1 Statement at ¶¶ 26-30.

In furtherance of his agreement to capitalize Cosy Goose USA, Mr. Diktopoulos contributed $65,000 to Cosy Goose USA through various wire transfers made between October 2003 and January 2004. See Pls' 56.1 Statement at ¶ 40; Defs' 56.1 Statement at ¶ 13. Mr. Diktopoulos also agreed to finance Cosy Goose USA by authorizing Mr. Weitman, on behalf of Laurevan, to pay certain debts Laurevan owed to Diktopoulos SA directly to Cosy Goose USA. See Pls' 56.1 Statement at ¶¶ 38, 41; Defs' 56.1 Statement at ¶ 15. This method of financing Cosy Goose USA, referred to by the parties as transferring "balance invoices" directly to Cosy Goose USA, was designed to circumvent delays and additional fees incurred in the process of Laurevan paying debts owed to Diktopoulos SA and Diktopoulos SA transferring the money back to Mr. Weitman to be used in the course of operating Cosy Goose USA. See Weitman Aff at ¶ 26 ("In other words, Laurevan paid some of Diktopoulos SA's money to Cosy Goose USA, instead of to Diktopoulos SA; this was a simpler procedure ... and it saved money on bank wire transfer fees."). The parties agree that this was a method designed to capitalize Cosy Goose USA; the parties dispute, however, the total amount that was transferred to Cosy Goose USA from Laurevan as part of this "balance invoice" transfer arrangement. See Pls' 56.1 Statement at ¶¶ 42, 43 (identifying $45,689.71 and $16,000 as separate amounts transferred to Cosy Goose USA from Laurevan); see Docket # 79, Affidavit of Paul Weitman in Opposition to Plaintiffs' Cross-Motion for Summary Judgement, Defendants' Response to Plaintiffs' 56.1 Statement (herein, "Defs' 56.1 Response") at ¶ 42 (admitting that the transfer of $45,689.71 was a way of Diktopoulos SA financing Cosy Goose USA);at ¶ 43 (denying that $16,000 was transferred to Cosy Goose USA from Laurevan for two invoices issued to Laurevan by Diktopoulos SA).

Apart from these efforts to capitalize the new Cosy Goose USA venture, Plaintiffs allege that Mr. Weitman and Laurevan covered certain daily operating expenses incurred by Cosy Goose USA in an effort to keep Cosy Goose USA's costs down. See, e.g., Pls' 56.1 Statement at ¶¶ 45-47 (asserting that Laurevan and Mr. Weitman provided Cosy Goose USA free rent, telephone services, utilities, marketing contacts, and other basic administrative services).³ Plaintiffs additionally allege that Laurevan processed credit card transactions for Cosy Goose USA and that Laurevan paid expenses on behalf of Cosy Goose USA, which Cosy Goose USA later reimbursed. See Pls' 56.1 Statement at ¶¶ 34, 35; Defs' 56.1 Response at ¶¶ 34, 35 (acknowledging the transactions between Laurevan and Cosy Goose USA).

Notwithstanding the detail afforded above, the parties never entered into a written agreement evincing their understanding about the nature and scope of their business relationship. The only written document exchanged between the parties was faxed by Mr. Diktopoulos to Mr. Weitman on July 1, 2003. See Pls' 56.1 Statement at ¶ 8; see also Weitman Aff., Ex. D, July 2003 Facsimile (herein, "July 2003 Business Plan"). This document, which appears on Diktopoulos SA stationery, purports to. offer Mr. Diktopoulos' "business plan" for Cosy Goose USA based upon the parties' discussion in White Plains, New York in June of 2003. See July 2003 Business Plan at p. 1. The plan, which consists of eight bullet points, outlines certain basic features of Cosy Goose USA, including a description of its marketing activities, its trading terms and policies, the manner in which the shoes will be sold, the pricing and pricing policy of the shoes, the...