Tomra of N. Am. v. Count & Crush, LLC
| Docket Number | 1:18-CV-1266 (LEK/DJS) |
| Decision Date | 18 September 2023 |
| Parties | TOMRA OF NORTH AMERICA, INC., Plaintiff, v. COUNT & CRUSH, LLC d/b/a/ CLYNK, and COUNT & CRUSH NY, LLC, Defendants. |
| Court | U.S. District Court — Northern District of New York |
WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER LLP, PETER A LAURICELLA, ESQ., NICOLE HAIMSON, ESQ., ANDREW S. HOLLAND ESQ., CHRISTOPHER PRIORE, ESQ., OLIVIA ORLANDO, ESQ. Attorneys for Plaintiff.
NIXON PEABODY LLP, ANDREW C. ROSE, ESQ., Attorneys for Defendants.
MARCUS, CLEGG, BALS & ROSENTHAL, P.A., GEORGE J. MARCUS, ESQ., DANIEL L. ROSENTHAL, ESQ. Attorneys for Defendants.
Plaintiff TOMRA of North America (“TOMRA”) “manufactures, leases, sells, installs, and maintains reverse vending machine systems” used in the recycling of used beverage containers (“UBC”). Dkt. No. 116-21, Argenio Decl., ¶ 4.[2] “Defendants provide a recycling redemption service, whereby consumers ‘bag' their recyclable materials and bring them to a redemption location (typically at a supermarket).” Dkt. No. 120-1, Defs.' Resp. to Pl.'s Rule 56.1 St., ¶ 3. The parties agree that they had a contractual relationship under which Defendants bought multiple machines from TOMRA to facilitate their business. See, e.g., id. at ¶¶ 6, 13, & 14. Defendants have made certain payments to TOMRA for those machines, but TOMRA maintains certain amounts remain due and owing. Id. at ¶¶ 23 & 24. That led TOMRA to file an action in New York State Supreme Court alleging inter alia, breach of contract. See Dkt. No. 2. Defendants removed the action to this Court based on diversity of citizenship, Dkt. No. 1, and filed counterclaims regarding breach of warranty and recission. Dkt. No. 25, Am. Answer.
Plaintiff has now filed a Motion to Dismiss Defendants' Counterclaims under FED. R. CIV. P. 12 and for Summary Judgment under FED. R. CIV. P. 56. Dkt. No. 116. Defendants oppose the Motions, Dkt. No. 120, and Plaintiff has filed a reply. Dkt. No. 129. Despite the heated exchange of rhetoric between the parties in their briefing, this case is, in fact, quite straightforward. What the voluminous record created by the submissions establishes beyond doubt is that questions of fact predominate that requires denial of the Motions. Given that discovery is now closed, the matter will be added to the Court's trial calendar.
Through a series of written agreements, the parties entered into a contractual relationship under which Defendants purchased ten of TOMRA's machines. Defs.' Resp. to Pl.'s Rule 56.1 St. at ¶ 6. The agreements took the form of a “Proposal and Technical Specifications for Automated Depot System” and are dated between December 2015 and August 2016. Dkt. No. 116-22. Neither party disputes that these agreements constituted binding contracts. Defs.' Resp. to Pl.'s Rule 56.1 St. at ¶ 13 Generally stated, the agreements each provided a summary of the equipment that was subject to the agreements, set forth the pricing and payment details, discussed related service agreements, and provided certain “Specifications” for the product. See, e.g., Dkt. No. 116-22 at pp. 2-7. Most relevant for present purposes, those specifications included stating that the equipment was designed for “Counting, sorting and capturing electronic bag detail” and stated that counting accuracy was 99%. Id. at p. 6.
The contracts were the result of extensive discussions between the parties about what Defendants were seeking to purchase. See, e.g., Dkt. No. 129-3, Pl.'s Resp. to Defs.' Rule 56.1 St. at ¶¶ 15-16 & 18-24. Following these discussions, the parties entered into the contracts and all of the contracted-for machines, were delivered by TOMRA and put into operation by Defendants between April 2016 and September 2016. Id. at ¶ 92. Beginning in July 2016, Defendants began to communicate to TOMRA concerns about the performance of the machines. Id. at ¶ 98. Significant factual disputes exist about what exactly was discussed, what TOMRA understood about what Defendants' expectations were, how and why certain design choices were made and the effect they may have had on the reported issues, and various other technical details underlying the operation of the machines. Despite these disputes, the parties agree that there were issues with the machines and they engaged in extended efforts to resolve the issues. See, e.g., id. at ¶¶ 106-109. This went on for several years.
Pursuant to the terms of the contracts, TOMRA has regularly billed Defendants for the cost of the machines and Defendants periodically made payments to TOMRA. Defs.' Resp. to Pl.'s Rule 56.1 St. at ¶¶ 22-23. The full amount of the cost of the machines has not been paid, though Defendants now deny that that amount remains due and owing. Id. at ¶¶ 24-25.
TOMRA commenced this lawsuit asserting claims for (1) breach of contract; (2) account stated; (3) quantum meruit; and (4) a claim for replevin. Compl. at ¶¶ 9-46. Defendants counterclaimed for breach of warranty and rescission. Am. Answer at pp. 5-7. Defendants allege that TOMRA's machines failed to perform in accordance with the express and implied warranties made by Plaintiff, specifically as they relate to the accuracy of the machines. Id.
Plaintiff's Motion first seeks dismissal of Defendants' counterclaims under Federal Rule of Civil Procedure 12(c). Dkt. No. 116-30, Pl.'s Mem. of Law at pp. 1316.
“The standard for granting a Rule 12(c) motion for judgment on the pleadings is identical to that of a Rule 12(b)(6) motion for failure to state a claim.” Patel v. Contemp. Classics of Beverly Hills, 259 F.3d 123, 126 (2d Cir. 2001). On a motion to dismiss, the allegations of the complaint must be accepted as true. See Cruz v. Beto, 405 U.S. 319, 322 (1972). The trial court's function “is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof.” Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980). “The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.” Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) (overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984)).
Plaintiff argues that Defendants' breach of warranty claims must be dismissed on the pleadings because they fail to adequately allege that Defendants provided notice to Plaintiff of the alleged breach. Pl.'s Mem. of Law at pp. 14-15.[3] Plaintiff also alleges that this counterclaim is “conclusory and facially insufficient.” Id. at p. 15.
While the Court does not disagree that Defendants could have pled these claims in greater detail, that is not the standard by which this Motion must be judged. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) () (internal quotation omitted) (emphasis added); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (“a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations.”). It is also clear, however, from a review of the extensive summary judgment record before the Court, that, even assuming the legal inadequacy of their pleading, Defendants would easily be able to amend the Complaint to amplify their pleading. See Dkt. No. 120, Defs.' Mem. of Law at p. 25 n.5 (). Though Plaintiff initially filed a Motion to Dismiss after the counterclaims were filed, that Motion was denied as moot in light of the filing of an Amended Answer, and significantly, Plaintiff did not renew its Motion in light of the now operative pleading. See Dkt. Nos. 21, 25, & 27. Given that nearly four years have passed, without apparent objection from Plaintiff regarding the sufficiency of the notice, Plaintiff could hardly claim to be prejudiced by such an amendment, see generally FED. R. CIV. P. 15, and therefore, the interests of judicial economy support denial of this Motion.
The Court concludes that the counterclaims are sufficiently pled in any event. “[I]n order to assert a breach of express warranty claim under New York law, ‘a buyer must provide the seller with timely notice of the alleged breach of warranty.'” Lugones v. Pete & Gerry's Organic, LLC, 440 F.Supp.3d 226, 244 (S.D.N.Y. 2020) (quoting Quinn v. Walgreen Co., 958 F.Supp.2d 533, 544 (S.D.N.Y. 2013)). While much of the pleading Defendants now rely on with respect to the issue of notice is contained in their counterclaim regarding rescission rather than the warranty claims, see Am. Answer at pp. 6-7, Defendants allege repeatedly that the machines had “performance problems,” that “Defendants documented performance inadequacies to Plaintiff,” and that “Defendants put Plaintiff on notice that the ADS machines were nonconforming, [and] unsuitable for their intended purpose.” Id. at p. 6. For purposes of a Motion to Dismiss, the Court finds these allegations sufficient.[4]
Nor does the Court agree that the breach of warranty claim is conclusory. The pleading requirements of the federal rules seek to provide adequate notice for the defendant as to a particular claim to defend itself. Powell v. Marine Midland Bank, 162 F.R.D. 15, 16 (N.D.N.Y. 1995). Those rules are designed to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S at 555. Plaintiff appears to have been on sufficient notice of the nature of counterclaim...
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