Oscar Mayer Corp. v. Mincing Trading Corp.

• Decision Date: 27 August 1990
• Docket Number: Civ. A. No. 88-3469.
• Citation: 744 F. Supp. 79
• Parties: OSCAR MAYER CORPORATION, Plaintiff, v. MINCING TRADING CORP., et al., Defendants, Third-Party Plaintiffs, v. BACTI-CHEM LABS, INC., et al., Third-Party Defendants.
• Court: U.S. District Court — District of New Jersey

744 F. Supp. 79

OSCAR MAYER CORPORATION, Plaintiff, v. MINCING TRADING CORP., et al., Defendants, Third-Party Plaintiffs, v. BACTI-CHEM LABS, INC., et al., Third-Party Defendants.

Civ. A. No. 88-3469.

United States District Court, D. New Jersey.

August 7, 1990.

As Amended August 27, 1990.

Michael F. Quinn, Crummy, Del Deo, Dolan, Griffinger & Vecchione, Newark, N.J., for plaintiff.

Michael R. Carlucci, Law Offices of Joseph G. Mosolino, East Hanover, N.J., for defendants, third-party plaintiffs.

Gregory J. Irwin, Harwood Lloyd, Hackensack, N.J., for third-party defendant Daarnhouwer.

Michael A. Graham, Garrity, Fitzpatrick, Graham, Hawkins & Favetta, Montclair, N.J., for third-party defendant A.A. Sayia & Co., Inc.

OPINION

WOLIN, District Judge.

Third-party defendant A.A. Sayia & Co., Inc. ("Sayia") moves for summary judgment asserting that no genuine issues of material fact exist and Sayia is entitled to judgment as a matter of law. Third-party plaintiffs Mincing Trading Corp. and Mincing Overseas Spice Co., Inc. (collectively "Mincing") and third-party defendant Daarnhouwer (New York), Inc. ("Daarnhouwer") allege that fact issues remain which preclude the entry of summary judgment. The Court has reviewed all the submissions of the parties. For the reasons which follow, the Court finds that no genuine issues of material fact exist and third-party defendant Sayia is entitled to judgment as a matter of law. Therefore, the Court will grant Sayia's motion for summary judgment and dismiss the third-party complaint and the crossclaims as against Sayia.

I. BACKGROUND

In the fall of 1986, Mincing received an order for 10,000 pounds of whole black pepper from plaintiff Oscar Mayer Corporation ("Oscar Mayer"). Brief of Mincing in Opposition to the Summary Judgment Motion ("Brief of Mincing") at 1. Mincing requested the assistance of Sayia, a broker in the spice business, to locate a merchant who would sell the required amount of pepper. Id. Sayia located Daarnhouwer, an importer and seller of spices, who was able to sell the required amount of pepper. The lot of pepper had been found to comply with the American Spice Trade Association cleanliness specifications after testing by Commodity Laboratories, Inc. on August 5, 1986, and by Bacti-Chem Labs, Inc. on September 30, 1986.¹ On or about October 21, 1986, Mincing purchased 183 bags of black pepper from Daarnhouwer. Final Pretrial Order at 3. Sayia prepared Spot Contract No. 63174 dated October 21, 1986, by which Daarnhouwer sold 10,000 pounds of "good merchantable quality Brazilian Black Pepper" to Mincing. Affidavit of Peter Sayia at ¶ 4.² It is not disputed that Sayia never had title to, possession or control of the peppercorns.

On or about November 11, 1986, Mincing sold the lot of 10,000 pounds of "whole black recleaned and treated peppercorns" to Oscar Mayer to be used as a spice in its food products. Final Pretrial Order at 2, 4. Based on its experience in supplying peppercorns to Oscar Mayer, Mincing conducted a series of procedures and/or tests on the peppercorns prior to delivery to Oscar Mayer. Id. at 3. Mincing delivered the peppercorns on or about December 15, 1987, and received full payment of the contract price. Id.

The shipment of peppercorns contained small stones, which remained undetected after a series of inspections and tests. Id. Consequently, the salami to which Oscar Mayer added the peppercorns was inedible and dangerous to the consumer. Id. at 4. As a result, Oscar Mayer incurred damages including expenses sustained in the settlement of claims with its customers who suffered dental injuries. Complaint at 5. Oscar Mayer then filed a complaint against Mincing in which it alleged the following causes of action: breach of contract, breach of express and implied warranties, negligent misrepresentations, and strict liability in tort.

Mincing then filed a third-party complaint against Daarnhouwer, Sayia, and the two laboratories. The third-party complaint against Sayia alleged negligence, breach of express and implied warranties, and strict liability in tort. Sayia moved for summary judgment to dismiss the third-party complaint and any cross-claims against it. Third-party plaintiff Mincing and third-party defendant Daarnhouwer each filed a brief in opposition to Sayia's motion for summary judgment.

II. DISCUSSION

A. Standard for Granting Summary Judgment

Summary judgment shall be granted if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the 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." Fed.R.Civ.P. 56(c); Hersch v. Allen Products Co., 789 F.2d 230, 232 (3d Cir.1986). In making this determination, a court must make all reasonable inferences in favor of the non-movant. Meyer v. Riegel Prods. Corp., 720 F.2d 303, 307 n. 2 (3d Cir.1983), cert. dismissed, 465 U.S. 1091, 104 S.Ct. 2144, 79 L.Ed.2d 910 (1984). "At the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). Summary judgment must be granted if no reasonable trier of fact could find for the non-moving party. Id. Moreover, if the moving party has carried its burden of establishing the absence of a genuine issue of material fact, the burden shifts to the non-moving party to "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). Therefore, when the non-moving party's evidence is merely "colorable" or "not significantly probative," the court may grant summary judgment. Anderson, 477 U.S. at 249-50, 106 S.Ct. at 2511.

B. Negligence

Mincing and Daarnhouwer claim that Sayia shares in the alleged negligence of the third-party defendants inasmuch as Sayia failed to investigate whether the pepper that Daarnhouwer offered to supply to Mincing was suitable to be prepared for resale for use in food products after customary spice industry processing. Brief of Mincing at 6. Mincing contends that a broker has a duty to discover the hidden defects in products which, through his services, will be exchanged between a buyer and seller. Id.

A broker is an intermediary. Tournier v. C.B. Snyder Realty Co., 130 N.J.L. 104, 106, 31 A.2d 492 (1943). A broker is one who is engaged, for a commission, in negotiating contracts for others that relate to property of which he has no concern. State v. Abortion Information Agency, Inc., 69 Misc.2d 825, 323 N.Y.S.2d 597, 600 (Sup.Ct.1971). A broker's primary function is to bring a buyer and seller together to negotiate with each other for the purpose of making a contract. Trihy v. Belsha, 52 Misc.2d 590, 276 N.Y.S.2d 313, 315 (Dist.Ct.1966), aff'd, 55 Misc.2d 797, 286 N.Y.S.2d 424 (App.Term 1967). A broker is entitled to compensation when a sale has been consummated because of his labors. Id. From the stipulated facts and the pleadings it is undisputed that Sayia was a broker in the transaction between Daarnhouwer and Mincing. Accordingly, the issue for determination is whether a spice broker has a duty to discover the latent defects of peppercorns that are exchanged between parties as a consequence to the broker performing his function. Whether this duty exists is a question of law.

The duty of a broker is to act with good faith toward his principal and not to act in any manner inconsistent with his agency or trust. Rothman Realty Corp. v. Bereck, 73 N.J. 590, 599, 376 A.2d 902 (1977); Selcow v. Floersheimer, 20 A.D.2d 889, 248 N.Y.S.2d 934, 935 (App. Div.1964). It is the broker's duty to keep the principal fully informed of all material facts which come to the broker's attention with respect to the transaction in which he is engaged and which affect the principal's interest and might influence his action. Silverman v. Bresnahan, 35 N.J.Super. 390, 395, 114 A.2d 307 (App.Div.1955); Murph & Fritz's Place, Inc. v. Loretta, 112 Misc.2d 554, 447 N.Y.S.2d 205, 207 (Cty.Ct.1982); Union Bank of Switzerland v. HS Equities, Inc., 457 F.Supp. 515, 522 (S.D.N.Y.1978). The duty to divulge information does not extend to all matters peripherally affecting the transaction. See, Sullivan v. Jefferson, Jefferson & Vaida, 167 N.J.Super. 282, 287, 400 A.2d 836 (App. Div.1979); Murph & Fritz's Place, 447 N.Y.S.2d at 209. See also, Harrington v. Norco Fruit Distributors, Inc., 40 A.D.2d 668, 337 N.Y.S.2d 59, 60 (App.Div.1972), aff'd, 33 N.Y.2d 607, 347 N.Y.S.2d 570, 301 N.E.2d 542 (N.Y.1973) (commodities broker was under no obligation, except as provided in U.C.C. § 7-507); Thorp v. Gosselin Hotel Co., 65 Ill.App.2d 107, 212 N.E.2d 1, 4 (1965) (broker for prospective purchaser of hotel had no duty to explore hotel's profits, nor to advise principal to inspect property, nor to completely inspect property himself).

The standard by which a broker's performance is to be measured is to be found in the brokerage agreement, and not in the agreement between the principal and a customer. Sanders A. Kahn Associates, Inc. v. Maidman, 69 Misc.2d 90, 329 N.Y. S.2d 121, 123 (Sup.Ct.1971), aff'd, 38 A.D.2d 798, 329 N.Y.S.2d 318 (App.Div.), aff'd, 30 N.Y.2d 831, 335 N.Y.S.2d 77, 286 N.E.2d 462 (N.Y.1972). In performing his undertaking, a broker must exercise reasonable care, skill and diligence. Sullivan, 167 N.J.Super. at 286-87, 400 A.2d 836; Murph & Fritz's Place, 447 N.Y.S.2d at 207.

The law of both New York and New Jersey described above, which governs the duty of a broker and the standard of care required of a broker, is, in all relevant respects, identical. These principles may, without qualification, be applied to a spice broker. In the absence of knowledge or...