Hellendall Distributors v. SB Thomas, Inc., Civ. A. No. 82-4595.

• Decision Date: 06 April 1983
• Docket Number: Civ. A. No. 82-4595.
• Citation: 559 F. Supp. 573
• Parties: HELLENDALL DISTRIBUTORS, INC. v. S.B. THOMAS, INC.
• Court: U.S. District Court — Eastern District of Pennsylvania

559 F. Supp. 573

HELLENDALL DISTRIBUTORS, INC. v. S.B. THOMAS, INC.

Civ. A. No. 82-4595.

United States District Court, E.D. Pennsylvania.

April 6, 1983.

Fox, Rothschild, O'Brien & Frankel, Abraham C. Reich, Philadelphia, Pa., for plaintiff.

Morgan, Lewis & Bockius, James J. Rodgers, Philadelphia, Pa., for defendant.

MEMORANDUM

NEWCOMER, District Judge.

Before the court is the defendant's motion for partial summary judgment on its counterclaim. The defendant is a producer of bakery products. The plaintiff is a distributor of bakery products and has distributed the defendant's products since 1941. On September 20, 1982, the defendant notified the plaintiff that it intended to terminate the plaintiff's distributorship. Shortly thereafter the plaintiff brought this action alleging, inter alia, that the defendant had breached a distributorship and franchise agreement with the plaintiff by unlawfully terminating it. In its answer, the defendant denied the plaintiff's allegations and counterclaimed, seeking payment for bakery products delivered to the plaintiff after September 25, 1982.

The defendant now moves for summary judgment on the counterclaim. Attached to its motion is the affidavit of John Androski, the defendant's controller. He states that the balance due the defendant for bakery products delivered to the plaintiff is $369,518.29. The plaintiff admits having received bakery products from the defendant for which it has not paid, and it has not raised any objections to the defendant's calculations of the amount owed. I will, therefore, assume that $369,518.29 is the amount owed for the goods delivered. See F.R.C.P. 56(e).

The plaintiff argues that it is entitled to set off the amount owed to the defendant for the goods delivered against the damages it seeks for breach of the alleged exclusive dealership contract, and that, therefore, the defendant's motion for summary judgment should be denied.

The plaintiff bases its right to set off on Section 2-717 of the Uniform Commercial Code,¹ which reads as follows:

The buyer on notifying the seller of his intention to do so, may deduct all or any part off the damages resulting from any breach of the contract from any part of the price still due under the same contract.

The plaintiff argues that the defendant breached an ongoing "exclusive dealing contract" when it terminated the plaintiff's distributorship, and, therefore, that the plaintiff has a right to deduct the resulting damages from the amount due to the defendant for delivered goods. Because the plaintiff has alleged damages in excess of the amount claimed in defendant's counterclaim, the plaintiff feels entitled to withhold payment of the entire sum.

It is axiomatic that summary judgment will not be granted if there exist disputed issues of material fact. The plaintiff claims that the existence and scope of the exclusive dealing contract remained in issue and that summary judgment, therefore, may not be granted. I disagree.

It is undisputed that the plaintiff has taken delivery of goods and has not rejected them. The plaintiff has, therefore, "accepted" the goods. See UCC § 2-606. Uniform Commercial Code § 2-607(1) states that "the buyer must pay at the contract rate for any goods accepted." Because the goods were accepted, the plaintiff has an obligation to pay the contract...